Correlation Between Taj GVK and 21st Century

Can any of the company-specific risk be diversified away by investing in both Taj GVK and 21st Century 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 Taj GVK and 21st Century into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taj GVK Hotels and 21st Century Management, you can compare the effects of market volatilities on Taj GVK and 21st Century 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 Taj GVK with a short position of 21st Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taj GVK and 21st Century.

Diversification Opportunities for Taj GVK and 21st Century

-0.82

Correlation Coefficient

Taj GVK  21st Century

Pay attention - limited upside

The 3 months correlation between Taj and 21st is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Taj GVK Hotels and 21st Century Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21st Century Management and Taj GVK 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 Taj GVK Hotels are associated (or correlated) with 21st Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21st Century Management has no effect on the direction of Taj GVK i.e., Taj GVK and 21st Century go up and down completely randomly.

Pair Corralation between Taj GVK and 21st Century

Assuming the 90 days trading horizon Taj GVK is expected to generate 1.79 times less return on investment than 21st Century. In addition to that, Taj GVK is 1.58 times more volatile than 21st Century Management. It trades about 0.06 of its total potential returns per unit of risk. 21st Century Management is currently generating about 0.18 per unit of volatility. If you would invest  1,994  in 21st Century Management on October 24, 2024 and sell it today you would earn a total of  6,841  from holding 21st Century Management or generate 343.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.39%
Values	Daily Returns

Taj GVK Hotels  vs.  21st Century Management

Taj GVK Hotels

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

21st Century Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 21st Century Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Taj GVK and 21st Century

The main advantage of trading using opposite Taj GVK and 21st Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taj GVK position performs unexpectedly, 21st Century 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 21st Century will offset losses from the drop in 21st Century's long position.

The idea behind Taj GVK Hotels and 21st Century Management 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.