Correlation Between Kamat Hotels and WESTLIFE FOODWORLD

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

Diversification Opportunities for Kamat Hotels and WESTLIFE FOODWORLD

KamatWESTLIFEDiversified AwayKamatWESTLIFEDiversified Away100%
-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Kamat and WESTLIFE is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kamat Hotels Limited and WESTLIFE FOODWORLD LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLIFE FOODWORLD 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 WESTLIFE FOODWORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLIFE FOODWORLD has no effect on the direction of Kamat Hotels i.e., Kamat Hotels and WESTLIFE FOODWORLD go up and down completely randomly.

Pair Corralation between Kamat Hotels and WESTLIFE FOODWORLD

Assuming the 90 days trading horizon Kamat Hotels Limited is expected to generate 1.74 times more return on investment than WESTLIFE FOODWORLD. However, Kamat Hotels is 1.74 times more volatile than WESTLIFE FOODWORLD LIMITED. It trades about 0.12 of its potential returns per unit of risk. WESTLIFE FOODWORLD LIMITED is currently generating about -0.07 per unit of risk. If you would invest  18,982  in Kamat Hotels Limited on October 7, 2024 and sell it today you would earn a total of  4,985  from holding Kamat Hotels Limited or generate 26.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kamat Hotels Limited  vs.  WESTLIFE FOODWORLD LIMITED

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-1001020
JavaScript chart by amCharts 3.21.15KAMATHOTEL WESTLIFE
       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 3.21.15NovDecJanDecJan180190200210220230240250
WESTLIFE FOODWORLD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days WESTLIFE FOODWORLD LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan700750800850900

Kamat Hotels and WESTLIFE FOODWORLD Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.46-7.83-5.21-2.58-0.04382.665.418.1610.9113.66 0.020.040.060.08
JavaScript chart by amCharts 3.21.15KAMATHOTEL WESTLIFE
       Returns  

Pair Trading with Kamat Hotels and WESTLIFE FOODWORLD

The main advantage of trading using opposite Kamat Hotels and WESTLIFE FOODWORLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kamat Hotels position performs unexpectedly, WESTLIFE FOODWORLD 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 WESTLIFE FOODWORLD will offset losses from the drop in WESTLIFE FOODWORLD's long position.
The idea behind Kamat Hotels Limited and WESTLIFE FOODWORLD 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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