Correlation Between Silver Touch and Chalet Hotels

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

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

Diversification Opportunities for Silver Touch and Chalet Hotels

0.62

Correlation Coefficient

Silver Touch  Chalet Hotels

Poor diversification

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

Pair Corralation between Silver Touch and Chalet Hotels

Assuming the 90 days trading horizon Silver Touch Technologies is expected to generate 0.7 times more return on investment than Chalet Hotels. However, Silver Touch Technologies is 1.42 times less risky than Chalet Hotels. It trades about -0.06 of its potential returns per unit of risk. Chalet Hotels Limited is currently generating about -0.07 per unit of risk. If you would invest  69,625  in Silver Touch Technologies on December 26, 2024 and sell it today you would lose (4,580) from holding Silver Touch Technologies or give up 6.58% of portfolio value over 90 days.

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

Silver Touch Technologies  vs.  Chalet Hotels Limited

Silver Touch Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver Touch Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Silver Touch is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Chalet Hotels Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chalet Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's essential 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 Silver Touch and Chalet Hotels

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

The idea behind Silver Touch Technologies and Chalet Hotels 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.