Correlation Between Oron Group and Dan Hotels

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

By analyzing existing cross correlation between Oron Group Investments and Dan Hotels, you can compare the effects of market volatilities on Oron Group and Dan 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 Oron Group with a short position of Dan Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oron Group and Dan Hotels.

Diversification Opportunities for Oron Group and Dan Hotels

0.44

Correlation Coefficient

Oron Group  Dan Hotels

Very weak diversification

The 3 months correlation between Oron and Dan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Oron Group Investments and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels and Oron Group 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 Oron Group Investments are associated (or correlated) with Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of Oron Group i.e., Oron Group and Dan Hotels go up and down completely randomly.

Pair Corralation between Oron Group and Dan Hotels

Assuming the 90 days trading horizon Oron Group Investments is expected to generate 1.09 times more return on investment than Dan Hotels. However, Oron Group is 1.09 times more volatile than Dan Hotels. It trades about 0.04 of its potential returns per unit of risk. Dan Hotels is currently generating about 0.02 per unit of risk. If you would invest  80,809  in Oron Group Investments on October 26, 2024 and sell it today you would earn a total of  29,991  from holding Oron Group Investments or generate 37.11% return on investment over 90 days.

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

Oron Group Investments  vs.  Dan Hotels

Oron Group Investments

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oron Group Investments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oron Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Dan Hotels

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dan Hotels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Dan Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oron Group and Dan Hotels

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

The idea behind Oron Group Investments and Dan Hotels 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.