Correlation Between Janashakthi Insurance and Dolphin Hotels

Can any of the company-specific risk be diversified away by investing in both Janashakthi Insurance and Dolphin Hotels 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 Janashakthi Insurance and Dolphin Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Janashakthi Insurance and Dolphin Hotels PLC, you can compare the effects of market volatilities on Janashakthi Insurance and Dolphin Hotels 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 Janashakthi Insurance with a short position of Dolphin Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janashakthi Insurance and Dolphin Hotels.

Diversification Opportunities for Janashakthi Insurance and Dolphin Hotels

0.88

Correlation Coefficient

Janashakthi Insurance  Dolphin Hotels

Very poor diversification

The 3 months correlation between Janashakthi and Dolphin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Janashakthi Insurance and Dolphin Hotels PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Hotels PLC and Janashakthi Insurance 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 Janashakthi Insurance are associated (or correlated) with Dolphin Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Hotels PLC has no effect on the direction of Janashakthi Insurance i.e., Janashakthi Insurance and Dolphin Hotels go up and down completely randomly.

Pair Corralation between Janashakthi Insurance and Dolphin Hotels

Assuming the 90 days trading horizon Janashakthi Insurance is expected to generate 0.83 times more return on investment than Dolphin Hotels. However, Janashakthi Insurance is 1.2 times less risky than Dolphin Hotels. It trades about 0.25 of its potential returns per unit of risk. Dolphin Hotels PLC is currently generating about 0.16 per unit of risk. If you would invest  5,440  in Janashakthi Insurance on October 25, 2024 and sell it today you would earn a total of  460.00  from holding Janashakthi Insurance or generate 8.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

Janashakthi Insurance  vs.  Dolphin Hotels PLC

Janashakthi Insurance

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Janashakthi Insurance are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Janashakthi Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Dolphin Hotels PLC

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dolphin Hotels PLC are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dolphin Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Janashakthi Insurance and Dolphin Hotels

The main advantage of trading using opposite Janashakthi Insurance and Dolphin Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janashakthi Insurance position performs unexpectedly, Dolphin Hotels 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 Dolphin Hotels will offset losses from the drop in Dolphin Hotels' long position.

The idea behind Janashakthi Insurance and Dolphin Hotels PLC 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.