Correlation Between NEW MAURITIUS and UNITED INVESTMENTS

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

By analyzing existing cross correlation between NEW MAURITIUS HOTELS and UNITED INVESTMENTS LTD, you can compare the effects of market volatilities on NEW MAURITIUS and UNITED INVESTMENTS 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 NEW MAURITIUS with a short position of UNITED INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MAURITIUS and UNITED INVESTMENTS.

Diversification Opportunities for NEW MAURITIUS and UNITED INVESTMENTS

0.3

Correlation Coefficient

NEW MAURITIUS  UNITED INVESTMENTS

Weak diversification

The 3 months correlation between NEW and UNITED is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NEW MAURITIUS HOTELS and UNITED INVESTMENTS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED INVESTMENTS LTD and NEW MAURITIUS 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 NEW MAURITIUS HOTELS are associated (or correlated) with UNITED INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED INVESTMENTS LTD has no effect on the direction of NEW MAURITIUS i.e., NEW MAURITIUS and UNITED INVESTMENTS go up and down completely randomly.

Pair Corralation between NEW MAURITIUS and UNITED INVESTMENTS

Assuming the 90 days trading horizon NEW MAURITIUS HOTELS is expected to generate 0.29 times more return on investment than UNITED INVESTMENTS. However, NEW MAURITIUS HOTELS is 3.39 times less risky than UNITED INVESTMENTS. It trades about -0.11 of its potential returns per unit of risk. UNITED INVESTMENTS LTD is currently generating about -0.09 per unit of risk. If you would invest  1,550  in NEW MAURITIUS HOTELS on October 20, 2024 and sell it today you would lose (140.00) from holding NEW MAURITIUS HOTELS or give up 9.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

NEW MAURITIUS HOTELS  vs.  UNITED INVESTMENTS LTD

NEW MAURITIUS HOTELS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEW MAURITIUS HOTELS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

UNITED INVESTMENTS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED INVESTMENTS LTD 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NEW MAURITIUS and UNITED INVESTMENTS

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

The idea behind NEW MAURITIUS HOTELS and UNITED INVESTMENTS LTD 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.