Correlation Between Kamat Hotels and Page Industries

Can any of the company-specific risk be diversified away by investing in both Kamat Hotels and Page Industries 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 Page Industries 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 Page Industries Limited, you can compare the effects of market volatilities on Kamat Hotels and Page Industries 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 Page Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kamat Hotels and Page Industries.

Diversification Opportunities for Kamat Hotels and Page Industries

-0.72

Correlation Coefficient

Kamat Hotels  Page Industries

Pay attention - limited upside

The 3 months correlation between Kamat and Page is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kamat Hotels Limited and Page Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Page Industries 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 Page Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Page Industries has no effect on the direction of Kamat Hotels i.e., Kamat Hotels and Page Industries go up and down completely randomly.

Pair Corralation between Kamat Hotels and Page Industries

Assuming the 90 days trading horizon Kamat Hotels Limited is expected to generate 3.0 times more return on investment than Page Industries. However, Kamat Hotels is 3.0 times more volatile than Page Industries Limited. It trades about 0.11 of its potential returns per unit of risk. Page Industries Limited is currently generating about -0.08 per unit of risk. If you would invest  23,504  in Kamat Hotels Limited on December 26, 2024 and sell it today you would earn a total of  6,961  from holding Kamat Hotels Limited or generate 29.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Kamat Hotels Limited  vs.  Page Industries Limited

Kamat Hotels Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kamat Hotels Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Kamat Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Page Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Page Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Kamat Hotels and Page Industries

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

The idea behind Kamat Hotels Limited and Page Industries 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.