Correlation Between SUNBIRD HOTELS and NATIONAL INVESTMENT

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

By analyzing existing cross correlation between SUNBIRD HOTELS TOURISM and NATIONAL INVESTMENT TRUST, you can compare the effects of market volatilities on SUNBIRD HOTELS and NATIONAL INVESTMENT 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 SUNBIRD HOTELS with a short position of NATIONAL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUNBIRD HOTELS and NATIONAL INVESTMENT.

Diversification Opportunities for SUNBIRD HOTELS and NATIONAL INVESTMENT

0.24

Correlation Coefficient

SUNBIRD HOTELS  NATIONAL INVESTMENT

Modest diversification

The 3 months correlation between SUNBIRD and NATIONAL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SUNBIRD HOTELS TOURISM and NATIONAL INVESTMENT TRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT TRUST and SUNBIRD 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 SUNBIRD HOTELS TOURISM are associated (or correlated) with NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT TRUST has no effect on the direction of SUNBIRD HOTELS i.e., SUNBIRD HOTELS and NATIONAL INVESTMENT go up and down completely randomly.

Pair Corralation between SUNBIRD HOTELS and NATIONAL INVESTMENT

Assuming the 90 days trading horizon SUNBIRD HOTELS is expected to generate 1.07 times less return on investment than NATIONAL INVESTMENT. But when comparing it to its historical volatility, SUNBIRD HOTELS TOURISM is 1.11 times less risky than NATIONAL INVESTMENT. It trades about 0.13 of its potential returns per unit of risk. NATIONAL INVESTMENT TRUST is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  41,116  in NATIONAL INVESTMENT TRUST on September 12, 2024 and sell it today you would earn a total of  2,884  from holding NATIONAL INVESTMENT TRUST or generate 7.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

SUNBIRD HOTELS TOURISM  vs.  NATIONAL INVESTMENT TRUST

SUNBIRD HOTELS TOURISM

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SUNBIRD HOTELS TOURISM are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, SUNBIRD HOTELS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL INVESTMENT TRUST are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NATIONAL INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SUNBIRD HOTELS and NATIONAL INVESTMENT

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

The idea behind SUNBIRD HOTELS TOURISM and NATIONAL INVESTMENT TRUST 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.