Correlation Between Sanginita Chemicals and EIH Associated

Can any of the company-specific risk be diversified away by investing in both Sanginita Chemicals and EIH Associated 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 Sanginita Chemicals and EIH Associated into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Sanginita Chemicals and EIH Associated

0.49

Correlation Coefficient

Sanginita Chemicals  EIH Associated

Very weak diversification

The 3 months correlation between Sanginita and EIH is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sanginita Chemicals Limited and EIH Associated Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIH Associated Hotels and Sanginita Chemicals 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 Sanginita Chemicals Limited are associated (or correlated) with EIH Associated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIH Associated Hotels has no effect on the direction of Sanginita Chemicals i.e., Sanginita Chemicals and EIH Associated go up and down completely randomly.

Pair Corralation between Sanginita Chemicals and EIH Associated

Assuming the 90 days trading horizon Sanginita Chemicals is expected to generate 1.64 times less return on investment than EIH Associated. In addition to that, Sanginita Chemicals is 1.03 times more volatile than EIH Associated Hotels. It trades about 0.01 of its total potential returns per unit of risk. EIH Associated Hotels is currently generating about 0.02 per unit of volatility. If you would invest  39,935  in EIH Associated Hotels on September 5, 2024 and sell it today you would earn a total of  575.00  from holding EIH Associated Hotels or generate 1.44% return on investment over 90 days.

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

Sanginita Chemicals Limited  vs.  EIH Associated Hotels

Sanginita Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanginita Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sanginita Chemicals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

EIH Associated Hotels

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Sanginita Chemicals and EIH Associated

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

The idea behind Sanginita Chemicals Limited and EIH Associated 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.