Correlation Between STANDARD ALLIANCE and TRANSCORP HOTELS

Can any of the company-specific risk be diversified away by investing in both STANDARD ALLIANCE and TRANSCORP 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 STANDARD ALLIANCE and TRANSCORP HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STANDARD ALLIANCE INSURANCE and TRANSCORP HOTELS PLC, you can compare the effects of market volatilities on STANDARD ALLIANCE and TRANSCORP 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 STANDARD ALLIANCE with a short position of TRANSCORP HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANDARD ALLIANCE and TRANSCORP HOTELS.

Diversification Opportunities for STANDARD ALLIANCE and TRANSCORP HOTELS

0.0

Correlation Coefficient

STANDARD ALLIANCE  TRANSCORP HOTELS

Pay attention - limited upside

The 3 months correlation between STANDARD and TRANSCORP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding STANDARD ALLIANCE INSURANCE and TRANSCORP HOTELS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSCORP HOTELS PLC and STANDARD ALLIANCE 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 STANDARD ALLIANCE INSURANCE are associated (or correlated) with TRANSCORP HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSCORP HOTELS PLC has no effect on the direction of STANDARD ALLIANCE i.e., STANDARD ALLIANCE and TRANSCORP HOTELS go up and down completely randomly.

Pair Corralation between STANDARD ALLIANCE and TRANSCORP HOTELS

If you would invest  10,600  in TRANSCORP HOTELS PLC on October 24, 2024 and sell it today you would earn a total of  2,135  from holding TRANSCORP HOTELS PLC or generate 20.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

STANDARD ALLIANCE INSURANCE  vs.  TRANSCORP HOTELS PLC

STANDARD ALLIANCE

Risk-Adjusted Performance

0 of 100

Very Weak

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

TRANSCORP HOTELS PLC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRANSCORP HOTELS PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, TRANSCORP HOTELS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STANDARD ALLIANCE and TRANSCORP HOTELS

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

The idea behind STANDARD ALLIANCE INSURANCE and TRANSCORP HOTELS PLC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.