Correlation Between Samhi Hotels and Infosys

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

Diversification Opportunities for Samhi Hotels and Infosys

0.62

Correlation Coefficient

Samhi Hotels  Infosys

Poor diversification

The 3 months correlation between Samhi and Infosys is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Samhi Hotels Limited and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of Samhi Hotels i.e., Samhi Hotels and Infosys go up and down completely randomly.

Pair Corralation between Samhi Hotels and Infosys

Assuming the 90 days trading horizon Samhi Hotels Limited is expected to generate 1.59 times more return on investment than Infosys. However, Samhi Hotels is 1.59 times more volatile than Infosys Limited. It trades about 0.05 of its potential returns per unit of risk. Infosys Limited is currently generating about 0.05 per unit of risk. If you would invest  14,340  in Samhi Hotels Limited on September 26, 2024 and sell it today you would earn a total of  5,208  from holding Samhi Hotels Limited or generate 36.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	63.66%
Values	Daily Returns

Samhi Hotels Limited  vs.  Infosys 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 latest stock price disarray, may contribute to short-term losses for the investors.

Infosys Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Infosys is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Samhi Hotels and Infosys

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

The idea behind Samhi Hotels Limited and Infosys 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.