Correlation Between Welspun Investments and Samhi Hotels

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

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

Diversification Opportunities for Welspun Investments and Samhi Hotels

0.34

Correlation Coefficient

Welspun Investments  Samhi Hotels

Weak diversification

The 3 months correlation between Welspun and Samhi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Welspun Investments and and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited and Welspun Investments 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 Welspun Investments and are associated (or correlated) with Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of Welspun Investments i.e., Welspun Investments and Samhi Hotels go up and down completely randomly.

Pair Corralation between Welspun Investments and Samhi Hotels

Assuming the 90 days trading horizon Welspun Investments is expected to generate 8.59 times less return on investment than Samhi Hotels. But when comparing it to its historical volatility, Welspun Investments and is 1.5 times less risky than Samhi Hotels. It trades about 0.03 of its potential returns per unit of risk. Samhi Hotels Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  18,299  in Samhi Hotels Limited on September 30, 2024 and sell it today you would earn a total of  1,368  from holding Samhi Hotels Limited or generate 7.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Welspun Investments and  vs.  Samhi Hotels Limited

Welspun Investments and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welspun Investments and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Welspun Investments is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Samhi Hotels Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Welspun Investments and Samhi Hotels

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

The idea behind Welspun Investments and and Samhi Hotels 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.