Correlation Between Linc and SINCLAIRS HOTELS

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

By analyzing existing cross correlation between Linc Limited and SINCLAIRS HOTELS ORD, you can compare the effects of market volatilities on Linc and SINCLAIRS 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 Linc with a short position of SINCLAIRS HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linc and SINCLAIRS HOTELS.

Diversification Opportunities for Linc and SINCLAIRS HOTELS

-0.13

Correlation Coefficient

Linc  SINCLAIRS HOTELS

Good diversification

The 3 months correlation between Linc and SINCLAIRS is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Linc Limited and SINCLAIRS HOTELS ORD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINCLAIRS HOTELS ORD and Linc 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 Linc Limited are associated (or correlated) with SINCLAIRS HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINCLAIRS HOTELS ORD has no effect on the direction of Linc i.e., Linc and SINCLAIRS HOTELS go up and down completely randomly.

Pair Corralation between Linc and SINCLAIRS HOTELS

Assuming the 90 days trading horizon Linc Limited is expected to under-perform the SINCLAIRS HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, Linc Limited is 1.07 times less risky than SINCLAIRS HOTELS. The stock trades about -0.08 of its potential returns per unit of risk. The SINCLAIRS HOTELS ORD is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  11,368  in SINCLAIRS HOTELS ORD on October 8, 2024 and sell it today you would earn a total of  1,788  from holding SINCLAIRS HOTELS ORD or generate 15.73% return on investment over 90 days.

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

Linc Limited  vs.  SINCLAIRS HOTELS ORD

Linc Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Linc Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Linc unveiled solid returns over the last few months and may actually be approaching a breakup point.

SINCLAIRS HOTELS ORD

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SINCLAIRS HOTELS ORD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, SINCLAIRS HOTELS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Linc and SINCLAIRS HOTELS

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

The idea behind Linc Limited and SINCLAIRS HOTELS ORD 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.