Correlation Between Martin Marietta and Dalata Hotel

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

By analyzing existing cross correlation between Martin Marietta Materials and Dalata Hotel Group, you can compare the effects of market volatilities on Martin Marietta and Dalata 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 Martin Marietta with a short position of Dalata Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Dalata Hotel.

Diversification Opportunities for Martin Marietta and Dalata Hotel

0.67

Correlation Coefficient

Martin Marietta  Dalata Hotel

Poor diversification

The 3 months correlation between Martin and Dalata is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Martin Marietta i.e., Martin Marietta and Dalata Hotel go up and down completely randomly.

Pair Corralation between Martin Marietta and Dalata Hotel

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.64 times more return on investment than Dalata Hotel. However, Martin Marietta Materials is 1.55 times less risky than Dalata Hotel. It trades about 0.05 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.02 per unit of risk. If you would invest  48,441  in Martin Marietta Materials on September 13, 2024 and sell it today you would earn a total of  7,927  from holding Martin Marietta Materials or generate 16.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.2%
Values	Daily Returns

Martin Marietta Materials  vs.  Dalata Hotel Group

Martin Marietta Materials

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dalata Hotel Group

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Dalata Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Martin Marietta and Dalata Hotel

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

The idea behind Martin Marietta Materials and Dalata Hotel Group 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.