Correlation Between Renuka City and THE KINGSBURY

Can any of the company-specific risk be diversified away by investing in both Renuka City and THE KINGSBURY 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 Renuka City and THE KINGSBURY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Renuka City Hotel and THE KINGSBURY PLC, you can compare the effects of market volatilities on Renuka City and THE KINGSBURY 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 Renuka City with a short position of THE KINGSBURY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renuka City and THE KINGSBURY.

Diversification Opportunities for Renuka City and THE KINGSBURY

0.88

Correlation Coefficient

Renuka City  THE KINGSBURY

Very poor diversification

The 3 months correlation between Renuka and THE is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Renuka City Hotel and THE KINGSBURY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THE KINGSBURY PLC and Renuka City 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 Renuka City Hotel are associated (or correlated) with THE KINGSBURY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THE KINGSBURY PLC has no effect on the direction of Renuka City i.e., Renuka City and THE KINGSBURY go up and down completely randomly.

Pair Corralation between Renuka City and THE KINGSBURY

Assuming the 90 days trading horizon Renuka City Hotel is expected to generate 1.22 times more return on investment than THE KINGSBURY. However, Renuka City is 1.22 times more volatile than THE KINGSBURY PLC. It trades about 0.07 of its potential returns per unit of risk. THE KINGSBURY PLC is currently generating about 0.07 per unit of risk. If you would invest  35,025  in Renuka City Hotel on October 26, 2024 and sell it today you would earn a total of  10,575  from holding Renuka City Hotel or generate 30.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	74.7%
Values	Daily Returns

Renuka City Hotel  vs.  THE KINGSBURY PLC

Renuka City Hotel

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Renuka City Hotel are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Renuka City sustained solid returns over the last few months and may actually be approaching a breakup point.

THE KINGSBURY PLC

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in THE KINGSBURY PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, THE KINGSBURY sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Renuka City and THE KINGSBURY

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

The idea behind Renuka City Hotel and THE KINGSBURY PLC 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.