Correlation Between MIRC Electronics and Asian Hotels

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

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

Diversification Opportunities for MIRC Electronics and Asian Hotels

-0.79

Correlation Coefficient

MIRC Electronics  Asian Hotels

Pay attention - limited upside

The 3 months correlation between MIRC and Asian is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding MIRC Electronics Limited and Asian Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Hotels Limited and MIRC Electronics 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 MIRC Electronics Limited are associated (or correlated) with Asian Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Hotels Limited has no effect on the direction of MIRC Electronics i.e., MIRC Electronics and Asian Hotels go up and down completely randomly.

Pair Corralation between MIRC Electronics and Asian Hotels

Assuming the 90 days trading horizon MIRC Electronics Limited is expected to under-perform the Asian Hotels. In addition to that, MIRC Electronics is 1.43 times more volatile than Asian Hotels Limited. It trades about -0.26 of its total potential returns per unit of risk. Asian Hotels Limited is currently generating about 0.12 per unit of volatility. If you would invest  30,524  in Asian Hotels Limited on December 28, 2024 and sell it today you would earn a total of  5,706  from holding Asian Hotels Limited or generate 18.69% return on investment over 90 days.

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

MIRC Electronics Limited  vs.  Asian Hotels Limited

MIRC Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days MIRC Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Asian Hotels Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asian 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, Asian Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MIRC Electronics and Asian Hotels

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

The idea behind MIRC Electronics Limited and Asian 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.