Correlation Between Pegasus Hotels and HATTON NATIONAL

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

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

Diversification Opportunities for Pegasus Hotels and HATTON NATIONAL

0.72

Correlation Coefficient

Pegasus Hotels  HATTON NATIONAL

Poor diversification

The 3 months correlation between Pegasus and HATTON is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pegasus Hotels of and HATTON NATIONAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HATTON NATIONAL BANK and Pegasus Hotels 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 Pegasus Hotels of are associated (or correlated) with HATTON NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HATTON NATIONAL BANK has no effect on the direction of Pegasus Hotels i.e., Pegasus Hotels and HATTON NATIONAL go up and down completely randomly.

Pair Corralation between Pegasus Hotels and HATTON NATIONAL

Assuming the 90 days trading horizon Pegasus Hotels of is expected to generate 2.02 times more return on investment than HATTON NATIONAL. However, Pegasus Hotels is 2.02 times more volatile than HATTON NATIONAL BANK. It trades about 0.2 of its potential returns per unit of risk. HATTON NATIONAL BANK is currently generating about 0.33 per unit of risk. If you would invest  2,620  in Pegasus Hotels of on September 15, 2024 and sell it today you would earn a total of  1,210  from holding Pegasus Hotels of or generate 46.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Pegasus Hotels of  vs.  HATTON NATIONAL BANK

Pegasus Hotels

Risk-Adjusted Performance

15 of 100

Good

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

HATTON NATIONAL BANK

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HATTON NATIONAL BANK are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HATTON NATIONAL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pegasus Hotels and HATTON NATIONAL

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

The idea behind Pegasus Hotels of and HATTON NATIONAL BANK 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.