Correlation Between FLOW TRADERS and DALATA HOTEL

Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and DALATA HOTEL 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 FLOW TRADERS and DALATA HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FLOW TRADERS LTD and DALATA HOTEL, you can compare the effects of market volatilities on FLOW TRADERS and DALATA HOTEL 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 FLOW TRADERS with a short position of DALATA HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and DALATA HOTEL.

Diversification Opportunities for FLOW TRADERS and DALATA HOTEL

0.33

Correlation Coefficient

FLOW TRADERS  DALATA HOTEL

Weak diversification

The 3 months correlation between FLOW and DALATA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and DALATA HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DALATA HOTEL and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with DALATA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DALATA HOTEL has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and DALATA HOTEL go up and down completely randomly.

Pair Corralation between FLOW TRADERS and DALATA HOTEL

Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 2.98 times more return on investment than DALATA HOTEL. However, FLOW TRADERS is 2.98 times more volatile than DALATA HOTEL. It trades about 0.07 of its potential returns per unit of risk. DALATA HOTEL is currently generating about 0.0 per unit of risk. If you would invest  2,176  in FLOW TRADERS LTD on September 22, 2024 and sell it today you would earn a total of  42.00  from holding FLOW TRADERS LTD or generate 1.93% return on investment over 90 days.

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

FLOW TRADERS LTD  vs.  DALATA HOTEL

FLOW TRADERS LTD

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FLOW TRADERS reported solid returns over the last few months and may actually be approaching a breakup point.

DALATA HOTEL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DALATA HOTEL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DALATA HOTEL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FLOW TRADERS and DALATA HOTEL

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

The idea behind FLOW TRADERS LTD and DALATA HOTEL 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.