Correlation Between Kamat Hotels and Le Travenues

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Can any of the company-specific risk be diversified away by investing in both Kamat Hotels and Le Travenues 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 Kamat Hotels and Le Travenues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kamat Hotels Limited and Le Travenues Technology, you can compare the effects of market volatilities on Kamat Hotels and Le Travenues 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 Kamat Hotels with a short position of Le Travenues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kamat Hotels and Le Travenues.

Diversification Opportunities for Kamat Hotels and Le Travenues

KamatIXIGODiversified AwayKamatIXIGODiversified Away100%
0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Kamat and IXIGO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kamat Hotels Limited and Le Travenues Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Le Travenues Technology and Kamat Hotels 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 Kamat Hotels Limited are associated (or correlated) with Le Travenues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Le Travenues Technology has no effect on the direction of Kamat Hotels i.e., Kamat Hotels and Le Travenues go up and down completely randomly.

Pair Corralation between Kamat Hotels and Le Travenues

Assuming the 90 days trading horizon Kamat Hotels Limited is expected to generate 1.16 times more return on investment than Le Travenues. However, Kamat Hotels is 1.16 times more volatile than Le Travenues Technology. It trades about 0.13 of its potential returns per unit of risk. Le Travenues Technology is currently generating about 0.13 per unit of risk. If you would invest  18,982  in Kamat Hotels Limited on October 5, 2024 and sell it today you would earn a total of  4,965  from holding Kamat Hotels Limited or generate 26.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Kamat Hotels Limited  vs.  Le Travenues Technology

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -505101520
JavaScript chart by amCharts 3.21.15KAMATHOTEL IXIGO
       Timeline  
Kamat Hotels Limited 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Kamat Hotels Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kamat Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecDecJan180190200210220230240250
Le Travenues Technology 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Le Travenues Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Le Travenues displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecDecJan140150160170180

Kamat Hotels and Le Travenues Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.46-7.84-5.21-2.580.04382.665.418.1610.9113.66 0.0150.0200.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15KAMATHOTEL IXIGO
       Returns  

Pair Trading with Kamat Hotels and Le Travenues

The main advantage of trading using opposite Kamat Hotels and Le Travenues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kamat Hotels position performs unexpectedly, Le Travenues 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 Le Travenues will offset losses from the drop in Le Travenues' long position.
The idea behind Kamat Hotels Limited and Le Travenues Technology 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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