Correlation Between BLANTYRE HOTELS and MALAWI PROPERTY

Can any of the company-specific risk be diversified away by investing in both BLANTYRE HOTELS and MALAWI PROPERTY 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 BLANTYRE HOTELS and MALAWI PROPERTY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BLANTYRE HOTELS LIMITED and MALAWI PROPERTY INVESTMENT, you can compare the effects of market volatilities on BLANTYRE HOTELS and MALAWI PROPERTY 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 BLANTYRE HOTELS with a short position of MALAWI PROPERTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLANTYRE HOTELS and MALAWI PROPERTY.

Diversification Opportunities for BLANTYRE HOTELS and MALAWI PROPERTY

0.42

Correlation Coefficient

BLANTYRE HOTELS  MALAWI PROPERTY

Very weak diversification

The 3 months correlation between BLANTYRE and MALAWI is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BLANTYRE HOTELS LIMITED and MALAWI PROPERTY INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MALAWI PROPERTY INVE and BLANTYRE 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 BLANTYRE HOTELS LIMITED are associated (or correlated) with MALAWI PROPERTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MALAWI PROPERTY INVE has no effect on the direction of BLANTYRE HOTELS i.e., BLANTYRE HOTELS and MALAWI PROPERTY go up and down completely randomly.

Pair Corralation between BLANTYRE HOTELS and MALAWI PROPERTY

Assuming the 90 days trading horizon BLANTYRE HOTELS is expected to generate 2.06 times less return on investment than MALAWI PROPERTY. But when comparing it to its historical volatility, BLANTYRE HOTELS LIMITED is 2.54 times less risky than MALAWI PROPERTY. It trades about 0.21 of its potential returns per unit of risk. MALAWI PROPERTY INVESTMENT is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,493  in MALAWI PROPERTY INVESTMENT on September 15, 2024 and sell it today you would earn a total of  360.00  from holding MALAWI PROPERTY INVESTMENT or generate 24.11% return on investment over 90 days.

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

BLANTYRE HOTELS LIMITED  vs.  MALAWI PROPERTY INVESTMENT

BLANTYRE HOTELS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BLANTYRE HOTELS LIMITED are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, BLANTYRE HOTELS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MALAWI PROPERTY INVE

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MALAWI PROPERTY INVESTMENT are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, MALAWI PROPERTY displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BLANTYRE HOTELS and MALAWI PROPERTY

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

The idea behind BLANTYRE HOTELS LIMITED and MALAWI PROPERTY INVESTMENT 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.