Correlation Between Credo Brands and Viceroy Hotels

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

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

Diversification Opportunities for Credo Brands and Viceroy Hotels

-0.21

Correlation Coefficient

Credo Brands  Viceroy Hotels

Very good diversification

The 3 months correlation between Credo and Viceroy is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Credo Brands Marketing and Viceroy Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viceroy Hotels and Credo Brands 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 Credo Brands Marketing are associated (or correlated) with Viceroy Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viceroy Hotels has no effect on the direction of Credo Brands i.e., Credo Brands and Viceroy Hotels go up and down completely randomly.

Pair Corralation between Credo Brands and Viceroy Hotels

Assuming the 90 days trading horizon Credo Brands Marketing is expected to under-perform the Viceroy Hotels. In addition to that, Credo Brands is 1.03 times more volatile than Viceroy Hotels Limited. It trades about -0.04 of its total potential returns per unit of risk. Viceroy Hotels Limited is currently generating about 0.08 per unit of volatility. If you would invest  11,402  in Viceroy Hotels Limited on September 2, 2024 and sell it today you would earn a total of  1,593  from holding Viceroy Hotels Limited or generate 13.97% return on investment over 90 days.

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

Credo Brands Marketing  vs.  Viceroy Hotels Limited

Credo Brands Marketing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credo Brands Marketing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Viceroy Hotels

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viceroy Hotels Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Viceroy Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Credo Brands and Viceroy Hotels

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

The idea behind Credo Brands Marketing and Viceroy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.