Correlation Between Taj GVK and Hemisphere Properties

Can any of the company-specific risk be diversified away by investing in both Taj GVK and Hemisphere Properties 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 Hemisphere Properties 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 Hemisphere Properties India, you can compare the effects of market volatilities on Taj GVK and Hemisphere Properties 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 Hemisphere Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taj GVK and Hemisphere Properties.

Diversification Opportunities for Taj GVK and Hemisphere Properties

-0.29

Correlation Coefficient

Taj GVK  Hemisphere Properties

Very good diversification

The 3 months correlation between Taj and Hemisphere is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Taj GVK Hotels and Hemisphere Properties India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Properties 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 Hemisphere Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Properties has no effect on the direction of Taj GVK i.e., Taj GVK and Hemisphere Properties go up and down completely randomly.

Pair Corralation between Taj GVK and Hemisphere Properties

Assuming the 90 days trading horizon Taj GVK Hotels is expected to generate 0.95 times more return on investment than Hemisphere Properties. However, Taj GVK Hotels is 1.05 times less risky than Hemisphere Properties. It trades about 0.12 of its potential returns per unit of risk. Hemisphere Properties India is currently generating about -0.06 per unit of risk. If you would invest  32,430  in Taj GVK Hotels on September 13, 2024 and sell it today you would earn a total of  5,595  from holding Taj GVK Hotels or generate 17.25% return on investment over 90 days.

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

Taj GVK Hotels  vs.  Hemisphere Properties India

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 uncertain technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

Hemisphere Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hemisphere Properties India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Taj GVK and Hemisphere Properties

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

The idea behind Taj GVK Hotels and Hemisphere Properties India 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.