Correlation Between Samhi Hotels and 3M India

Can any of the company-specific risk be diversified away by investing in both Samhi Hotels and 3M India 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 Samhi Hotels and 3M India into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samhi Hotels Limited and 3M India Limited, you can compare the effects of market volatilities on Samhi Hotels and 3M India 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 Samhi Hotels with a short position of 3M India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhi Hotels and 3M India.

Diversification Opportunities for Samhi Hotels and 3M India

-0.29

Correlation Coefficient

Samhi Hotels  3M India

Very good diversification

The 3 months correlation between Samhi and 3MINDIA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Samhi Hotels Limited and 3M India Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M India Limited and Samhi 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 Samhi Hotels Limited are associated (or correlated) with 3M India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M India Limited has no effect on the direction of Samhi Hotels i.e., Samhi Hotels and 3M India go up and down completely randomly.

Pair Corralation between Samhi Hotels and 3M India

Assuming the 90 days trading horizon Samhi Hotels Limited is expected to generate 1.43 times more return on investment than 3M India. However, Samhi Hotels is 1.43 times more volatile than 3M India Limited. It trades about -0.03 of its potential returns per unit of risk. 3M India Limited is currently generating about -0.11 per unit of risk. If you would invest  20,413  in Samhi Hotels Limited on October 10, 2024 and sell it today you would lose (1,128) from holding Samhi Hotels Limited or give up 5.53% of portfolio value over 90 days.

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

Samhi Hotels Limited  vs.  3M India Limited

Samhi Hotels Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhi Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Samhi Hotels is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

3M India Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 3M India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Samhi Hotels and 3M India

The main advantage of trading using opposite Samhi Hotels and 3M India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhi Hotels position performs unexpectedly, 3M India 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 3M India will offset losses from the drop in 3M India's long position.

The idea behind Samhi Hotels Limited and 3M India 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.