Correlation Between Viceroy Hotels and Arvind

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

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

Diversification Opportunities for Viceroy Hotels and Arvind

-0.46

Correlation Coefficient

Viceroy Hotels  Arvind

Very good diversification

The 3 months correlation between Viceroy and Arvind is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Viceroy Hotels Limited and Arvind Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arvind Limited and Viceroy 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 Viceroy Hotels Limited are associated (or correlated) with Arvind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arvind Limited has no effect on the direction of Viceroy Hotels i.e., Viceroy Hotels and Arvind go up and down completely randomly.

Pair Corralation between Viceroy Hotels and Arvind

Assuming the 90 days trading horizon Viceroy Hotels Limited is expected to generate 0.76 times more return on investment than Arvind. However, Viceroy Hotels Limited is 1.32 times less risky than Arvind. It trades about 0.0 of its potential returns per unit of risk. Arvind Limited is currently generating about -0.11 per unit of risk. If you would invest  12,137  in Viceroy Hotels Limited on October 26, 2024 and sell it today you would lose (68.00) from holding Viceroy Hotels Limited or give up 0.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Viceroy Hotels Limited  vs.  Arvind Limited

Viceroy Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

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

Arvind Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arvind Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Arvind is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Viceroy Hotels and Arvind

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

The idea behind Viceroy Hotels Limited and Arvind 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.