Correlation Between Samhi Hotels and Indian Hotels

Can any of the company-specific risk be diversified away by investing in both Samhi Hotels 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 Samhi Hotels and Indian Hotels 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 The Indian Hotels, you can compare the effects of market volatilities on Samhi Hotels 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 Samhi Hotels with a short position of Indian Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhi Hotels and Indian Hotels.

Diversification Opportunities for Samhi Hotels and Indian Hotels

0.39

Correlation Coefficient

Samhi Hotels  Indian Hotels

Weak diversification

The 3 months correlation between Samhi and Indian is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Samhi Hotels 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 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 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 Samhi Hotels i.e., Samhi Hotels and Indian Hotels go up and down completely randomly.

Pair Corralation between Samhi Hotels and Indian Hotels

Assuming the 90 days trading horizon Samhi Hotels is expected to generate 2.29 times less return on investment than Indian Hotels. In addition to that, Samhi Hotels is 1.17 times more volatile than The Indian Hotels. It trades about 0.13 of its total potential returns per unit of risk. The Indian Hotels is currently generating about 0.35 per unit of volatility. If you would invest  68,380  in The Indian Hotels on October 8, 2024 and sell it today you would earn a total of  18,865  from holding The Indian Hotels or generate 27.59% return on investment over 90 days.

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

Samhi Hotels Limited  vs.  The Indian Hotels

Samhi Hotels Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samhi Hotels Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Indian Hotels

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Indian Hotels are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Indian Hotels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samhi Hotels and Indian Hotels

The main advantage of trading using opposite Samhi Hotels and Indian Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhi Hotels 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 Samhi Hotels 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.