Correlation Between Viceroy Hotels and Diligent Media

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

Diversification Opportunities for Viceroy Hotels and Diligent Media

-0.11

Correlation Coefficient

Viceroy Hotels  Diligent Media

Good diversification

The 3 months correlation between Viceroy and Diligent is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Viceroy Hotels Limited and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media 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 Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of Viceroy Hotels i.e., Viceroy Hotels and Diligent Media go up and down completely randomly.

Pair Corralation between Viceroy Hotels and Diligent Media

Assuming the 90 days trading horizon Viceroy Hotels Limited is expected to under-perform the Diligent Media. But the stock apears to be less risky and, when comparing its historical volatility, Viceroy Hotels Limited is 2.48 times less risky than Diligent Media. The stock trades about -0.12 of its potential returns per unit of risk. The Diligent Media is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  521.00  in Diligent Media on December 2, 2024 and sell it today you would earn a total of  2.00  from holding Diligent Media or generate 0.38% return on investment over 90 days.

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

Viceroy Hotels Limited  vs.  Diligent Media

Viceroy Hotels

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Diligent Media

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diligent Media are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental indicators, Diligent Media may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Viceroy Hotels and Diligent Media

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

The idea behind Viceroy Hotels Limited and Diligent Media 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.