Correlation Between Samhi Hotels and Jindal Drilling

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

Diversification Opportunities for Samhi Hotels and Jindal Drilling

0.31

Correlation Coefficient

Samhi Hotels  Jindal Drilling

Weak diversification

The 3 months correlation between Samhi and Jindal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Samhi Hotels Limited and Jindal Drilling And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Drilling And 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 Jindal Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Drilling And has no effect on the direction of Samhi Hotels i.e., Samhi Hotels and Jindal Drilling go up and down completely randomly.

Pair Corralation between Samhi Hotels and Jindal Drilling

Assuming the 90 days trading horizon Samhi Hotels is expected to generate 3.16 times less return on investment than Jindal Drilling. But when comparing it to its historical volatility, Samhi Hotels Limited is 1.32 times less risky than Jindal Drilling. It trades about 0.06 of its potential returns per unit of risk. Jindal Drilling And is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  59,365  in Jindal Drilling And on October 25, 2024 and sell it today you would earn a total of  14,770  from holding Jindal Drilling And or generate 24.88% 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.  Jindal Drilling And

Samhi Hotels Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samhi Hotels Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Samhi Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jindal Drilling And

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Drilling And are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward indicators, Jindal Drilling disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samhi Hotels and Jindal Drilling

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

The idea behind Samhi Hotels Limited and Jindal Drilling And 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.