Correlation Between Oil Natural and Kamat Hotels

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

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

Diversification Opportunities for Oil Natural and Kamat Hotels

-0.61

Correlation Coefficient

Oil Natural  Kamat Hotels

Excellent diversification

The 3 months correlation between Oil and Kamat is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Kamat Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamat Hotels Limited and Oil Natural 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 Oil Natural Gas are associated (or correlated) with Kamat Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamat Hotels Limited has no effect on the direction of Oil Natural i.e., Oil Natural and Kamat Hotels go up and down completely randomly.

Pair Corralation between Oil Natural and Kamat Hotels

Assuming the 90 days trading horizon Oil Natural is expected to generate 3.29 times less return on investment than Kamat Hotels. But when comparing it to its historical volatility, Oil Natural Gas is 2.52 times less risky than Kamat Hotels. It trades about 0.07 of its potential returns per unit of risk. Kamat Hotels Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  23,032  in Kamat Hotels Limited on December 29, 2024 and sell it today you would earn a total of  5,678  from holding Kamat Hotels Limited or generate 24.65% return on investment over 90 days.

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

Oil Natural Gas  vs.  Kamat Hotels Limited

Oil Natural Gas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Natural Gas are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Oil Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kamat Hotels Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kamat Hotels Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kamat Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oil Natural and Kamat Hotels

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

The idea behind Oil Natural Gas and Kamat 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 Stocks Directory module to find actively traded stocks across global markets.