Correlation Between NATIONAL INVESTMENT and BLANTYRE HOTELS

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

By analyzing existing cross correlation between NATIONAL INVESTMENT TRUST and BLANTYRE HOTELS LIMITED, you can compare the effects of market volatilities on NATIONAL INVESTMENT and BLANTYRE 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 NATIONAL INVESTMENT with a short position of BLANTYRE HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL INVESTMENT and BLANTYRE HOTELS.

Diversification Opportunities for NATIONAL INVESTMENT and BLANTYRE HOTELS

0.12

Correlation Coefficient

NATIONAL INVESTMENT  BLANTYRE HOTELS

Average diversification

The 3 months correlation between NATIONAL and BLANTYRE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL INVESTMENT TRUST and BLANTYRE HOTELS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLANTYRE HOTELS and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT TRUST are associated (or correlated) with BLANTYRE HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLANTYRE HOTELS has no effect on the direction of NATIONAL INVESTMENT i.e., NATIONAL INVESTMENT and BLANTYRE HOTELS go up and down completely randomly.

Pair Corralation between NATIONAL INVESTMENT and BLANTYRE HOTELS

Assuming the 90 days trading horizon NATIONAL INVESTMENT is expected to generate 1.58 times less return on investment than BLANTYRE HOTELS. In addition to that, NATIONAL INVESTMENT is 1.13 times more volatile than BLANTYRE HOTELS LIMITED. It trades about 0.12 of its total potential returns per unit of risk. BLANTYRE HOTELS LIMITED is currently generating about 0.21 per unit of volatility. If you would invest  1,305  in BLANTYRE HOTELS LIMITED on September 5, 2024 and sell it today you would earn a total of  150.00  from holding BLANTYRE HOTELS LIMITED or generate 11.49% return on investment over 90 days.

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

NATIONAL INVESTMENT TRUST  vs.  BLANTYRE HOTELS LIMITED

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL INVESTMENT TRUST are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, NATIONAL INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BLANTYRE HOTELS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BLANTYRE HOTELS LIMITED are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, BLANTYRE HOTELS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NATIONAL INVESTMENT and BLANTYRE HOTELS

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

The idea behind NATIONAL INVESTMENT TRUST and BLANTYRE 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.