Correlation Between PB Fintech and Indian Hotels

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

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

Diversification Opportunities for PB Fintech and Indian Hotels

0.83

Correlation Coefficient

PB Fintech  Indian Hotels

Very poor diversification

The 3 months correlation between POLICYBZR and Indian is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PB Fintech Limited and The Indian Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Hotels and PB Fintech 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 PB Fintech Limited are associated (or correlated) with Indian Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Hotels has no effect on the direction of PB Fintech i.e., PB Fintech and Indian Hotels go up and down completely randomly.

Pair Corralation between PB Fintech and Indian Hotels

Assuming the 90 days trading horizon PB Fintech Limited is expected to under-perform the Indian Hotels. In addition to that, PB Fintech is 1.56 times more volatile than The Indian Hotels. It trades about -0.1 of its total potential returns per unit of risk. The Indian Hotels is currently generating about -0.07 per unit of volatility. If you would invest  88,965  in The Indian Hotels on December 29, 2024 and sell it today you would lose (10,210) from holding The Indian Hotels or give up 11.48% of portfolio value over 90 days.

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

PB Fintech Limited  vs.  The Indian Hotels

PB Fintech Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days PB Fintech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Indian Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Indian Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with PB Fintech and Indian Hotels

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

The idea behind PB Fintech Limited and The Indian 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..