Correlation Between NATIONAL INVESTMENT and CONSTANCE HOTELS

Can any of the company-specific risk be diversified away by investing in both NATIONAL INVESTMENT and CONSTANCE 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 CONSTANCE 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 CONSTANCE HOTELS SERVICES, you can compare the effects of market volatilities on NATIONAL INVESTMENT and CONSTANCE 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 CONSTANCE HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL INVESTMENT and CONSTANCE HOTELS.

Diversification Opportunities for NATIONAL INVESTMENT and CONSTANCE HOTELS

0.23

Correlation Coefficient

NATIONAL INVESTMENT  CONSTANCE HOTELS

Modest diversification

The 3 months correlation between NATIONAL and CONSTANCE is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL INVESTMENT TRUST and CONSTANCE HOTELS SERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTANCE HOTELS SERVICES 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 CONSTANCE HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTANCE HOTELS SERVICES has no effect on the direction of NATIONAL INVESTMENT i.e., NATIONAL INVESTMENT and CONSTANCE HOTELS go up and down completely randomly.

Pair Corralation between NATIONAL INVESTMENT and CONSTANCE HOTELS

Assuming the 90 days trading horizon NATIONAL INVESTMENT TRUST is expected to generate 22.06 times more return on investment than CONSTANCE HOTELS. However, NATIONAL INVESTMENT is 22.06 times more volatile than CONSTANCE HOTELS SERVICES. It trades about 0.05 of its potential returns per unit of risk. CONSTANCE HOTELS SERVICES is currently generating about 0.0 per unit of risk. If you would invest  1,010  in NATIONAL INVESTMENT TRUST on September 15, 2024 and sell it today you would earn a total of  90.00  from holding NATIONAL INVESTMENT TRUST or generate 8.91% return on investment over 90 days.

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

NATIONAL INVESTMENT TRUST  vs.  CONSTANCE HOTELS SERVICES

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL INVESTMENT TRUST are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, NATIONAL INVESTMENT exhibited solid returns over the last few months and may actually be approaching a breakup point.

CONSTANCE HOTELS SERVICES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTANCE HOTELS SERVICES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CONSTANCE HOTELS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NATIONAL INVESTMENT and CONSTANCE HOTELS

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

The idea behind NATIONAL INVESTMENT TRUST and CONSTANCE HOTELS SERVICES 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.