Correlation Between Irish Continental and Dalata Hotel

Can any of the company-specific risk be diversified away by investing in both Irish Continental and Dalata Hotel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Irish Continental and Dalata Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Irish Continental Group and Dalata Hotel Group, you can compare the effects of market volatilities on Irish Continental and Dalata Hotel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Irish Continental with a short position of Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Irish Continental and Dalata Hotel.

Diversification Opportunities for Irish Continental and Dalata Hotel

-0.17

Correlation Coefficient

Irish Continental  Dalata Hotel

Good diversification

The 3 months correlation between Irish and Dalata is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Irish Continental Group and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group and Irish Continental is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Irish Continental Group are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Irish Continental i.e., Irish Continental and Dalata Hotel go up and down completely randomly.

Pair Corralation between Irish Continental and Dalata Hotel

Assuming the 90 days trading horizon Irish Continental Group is expected to generate 1.05 times more return on investment than Dalata Hotel. However, Irish Continental is 1.05 times more volatile than Dalata Hotel Group. It trades about 0.02 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.0 per unit of risk. If you would invest  546.00  in Irish Continental Group on August 30, 2024 and sell it today you would earn a total of  4.00  from holding Irish Continental Group or generate 0.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Irish Continental Group  vs.  Dalata Hotel Group

Irish Continental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Irish Continental Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Irish Continental is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalata Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Dalata Hotel is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Irish Continental and Dalata Hotel

The main advantage of trading using opposite Irish Continental and Dalata Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Irish Continental position performs unexpectedly, Dalata Hotel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dalata Hotel will offset losses from the drop in Dalata Hotel's long position.

The idea behind Irish Continental Group and Dalata Hotel Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.