Correlation Between Harn Len and Shangri La

Can any of the company-specific risk be diversified away by investing in both Harn Len and Shangri La 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 Harn Len and Shangri La into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Harn Len and Shangri La

-0.41

Correlation Coefficient

Harn Len  Shangri La

Very good diversification

The 3 months correlation between Harn and Shangri is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Harn Len and Shangri La Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotels and Harn Len 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 Harn Len are associated (or correlated) with Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotels has no effect on the direction of Harn Len i.e., Harn Len and Shangri La go up and down completely randomly.

Pair Corralation between Harn Len and Shangri La

Assuming the 90 days trading horizon Harn Len is expected to generate 1.77 times more return on investment than Shangri La. However, Harn Len is 1.77 times more volatile than Shangri La Hotels. It trades about 0.06 of its potential returns per unit of risk. Shangri La Hotels is currently generating about -0.01 per unit of risk. If you would invest  37.00  in Harn Len on September 26, 2024 and sell it today you would earn a total of  2.00  from holding Harn Len or generate 5.41% return on investment over 90 days.

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

Harn Len  vs.  Shangri La Hotels

Harn Len

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Harn Len are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Harn Len is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Shangri La Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Harn Len and Shangri La

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

The idea behind Harn Len and Shangri La Hotels 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.