Correlation Between SENECA FOODS and MIRAMAR HOTEL

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

By analyzing existing cross correlation between SENECA FOODS A and MIRAMAR HOTEL INV, you can compare the effects of market volatilities on SENECA FOODS and MIRAMAR HOTEL 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 SENECA FOODS with a short position of MIRAMAR HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and MIRAMAR HOTEL.

Diversification Opportunities for SENECA FOODS and MIRAMAR HOTEL

0.52

Correlation Coefficient

SENECA FOODS  MIRAMAR HOTEL

Very weak diversification

The 3 months correlation between SENECA and MIRAMAR is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and MIRAMAR HOTEL INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRAMAR HOTEL INV and SENECA FOODS 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 SENECA FOODS A are associated (or correlated) with MIRAMAR HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRAMAR HOTEL INV has no effect on the direction of SENECA FOODS i.e., SENECA FOODS and MIRAMAR HOTEL go up and down completely randomly.

Pair Corralation between SENECA FOODS and MIRAMAR HOTEL

Assuming the 90 days trading horizon SENECA FOODS is expected to generate 1.04 times less return on investment than MIRAMAR HOTEL. But when comparing it to its historical volatility, SENECA FOODS A is 1.19 times less risky than MIRAMAR HOTEL. It trades about 0.07 of its potential returns per unit of risk. MIRAMAR HOTEL INV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  75.00  in MIRAMAR HOTEL INV on October 26, 2024 and sell it today you would earn a total of  35.00  from holding MIRAMAR HOTEL INV or generate 46.67% return on investment over 90 days.

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

SENECA FOODS A  vs.  MIRAMAR HOTEL INV

SENECA FOODS A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SENECA FOODS exhibited solid returns over the last few months and may actually be approaching a breakup point.

MIRAMAR HOTEL INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIRAMAR HOTEL INV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, MIRAMAR HOTEL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SENECA FOODS and MIRAMAR HOTEL

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

The idea behind SENECA FOODS A and MIRAMAR HOTEL INV 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.