Correlation Between Impiana Hotels and Diversified Gateway

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

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

Diversification Opportunities for Impiana Hotels and Diversified Gateway

0.46

Correlation Coefficient

Impiana Hotels  Diversified Gateway

Very weak diversification

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

Pair Corralation between Impiana Hotels and Diversified Gateway

Assuming the 90 days trading horizon Impiana Hotels Bhd is expected to under-perform the Diversified Gateway. But the stock apears to be less risky and, when comparing its historical volatility, Impiana Hotels Bhd is 1.21 times less risky than Diversified Gateway. The stock trades about -0.03 of its potential returns per unit of risk. The Diversified Gateway Solutions is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Diversified Gateway Solutions on October 1, 2024 and sell it today you would earn a total of  0.00  from holding Diversified Gateway Solutions or generate 0.0% return on investment over 90 days.

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

Impiana Hotels Bhd  vs.  Diversified Gateway Solutions

Impiana Hotels Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impiana Hotels Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Impiana Hotels is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Diversified Gateway

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diversified Gateway Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Diversified Gateway is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Impiana Hotels and Diversified Gateway

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

The idea behind Impiana Hotels Bhd and Diversified Gateway Solutions 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..