Correlation Between Jyoti CNC and Samhi Hotels

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

By analyzing existing cross correlation between Jyoti CNC Automation and Samhi Hotels Limited, you can compare the effects of market volatilities on Jyoti CNC and Samhi 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 Jyoti CNC with a short position of Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jyoti CNC and Samhi Hotels.

Diversification Opportunities for Jyoti CNC and Samhi Hotels

0.62

Correlation Coefficient

Jyoti CNC  Samhi Hotels

Poor diversification

The 3 months correlation between Jyoti and Samhi is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jyoti CNC Automation and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited and Jyoti CNC 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 Jyoti CNC Automation are associated (or correlated) with Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of Jyoti CNC i.e., Jyoti CNC and Samhi Hotels go up and down completely randomly.

Pair Corralation between Jyoti CNC and Samhi Hotels

Assuming the 90 days trading horizon Jyoti CNC Automation is expected to under-perform the Samhi Hotels. In addition to that, Jyoti CNC is 1.01 times more volatile than Samhi Hotels Limited. It trades about -0.13 of its total potential returns per unit of risk. Samhi Hotels Limited is currently generating about -0.08 per unit of volatility. If you would invest  19,675  in Samhi Hotels Limited on October 21, 2024 and sell it today you would lose (920.00) from holding Samhi Hotels Limited or give up 4.68% of portfolio value over 90 days.

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

Jyoti CNC Automation  vs.  Samhi Hotels Limited

Jyoti CNC Automation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jyoti CNC Automation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Jyoti CNC displayed solid returns over the last few months and may actually be approaching a breakup point.

Samhi Hotels Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhi Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Samhi Hotels is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Jyoti CNC and Samhi Hotels

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

The idea behind Jyoti CNC Automation and Samhi Hotels Limited 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.