Correlation Between State Trading and Kamat Hotels

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

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

Diversification Opportunities for State Trading and Kamat Hotels

0.52

Correlation Coefficient

State Trading  Kamat Hotels

Very weak diversification

The 3 months correlation between State and Kamat is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding The State Trading and Kamat Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamat Hotels Limited and State Trading 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 The State Trading are associated (or correlated) with Kamat Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamat Hotels Limited has no effect on the direction of State Trading i.e., State Trading and Kamat Hotels go up and down completely randomly.

Pair Corralation between State Trading and Kamat Hotels

Assuming the 90 days trading horizon The State Trading is expected to generate 1.39 times more return on investment than Kamat Hotels. However, State Trading is 1.39 times more volatile than Kamat Hotels Limited. It trades about 0.03 of its potential returns per unit of risk. Kamat Hotels Limited is currently generating about 0.0 per unit of risk. If you would invest  14,125  in The State Trading on October 25, 2024 and sell it today you would earn a total of  296.00  from holding The State Trading or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

The State Trading  vs.  Kamat Hotels Limited

State Trading

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The State Trading are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, State Trading is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Kamat Hotels Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kamat Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Kamat Hotels is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with State Trading and Kamat Hotels

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

The idea behind The State Trading and Kamat 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.