Correlation Between Dan Hotels and Bio Meat

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

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

Diversification Opportunities for Dan Hotels and Bio Meat

0.38

Correlation Coefficient

Dan Hotels  Bio Meat

Weak diversification

The 3 months correlation between Dan and Bio is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Bio Meat Foodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Meat Foodtech and Dan 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 Dan Hotels are associated (or correlated) with Bio Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Meat Foodtech has no effect on the direction of Dan Hotels i.e., Dan Hotels and Bio Meat go up and down completely randomly.

Pair Corralation between Dan Hotels and Bio Meat

Assuming the 90 days trading horizon Dan Hotels is expected to generate 0.79 times more return on investment than Bio Meat. However, Dan Hotels is 1.27 times less risky than Bio Meat. It trades about 0.0 of its potential returns per unit of risk. Bio Meat Foodtech is currently generating about 0.0 per unit of risk. If you would invest  230,000  in Dan Hotels on September 30, 2024 and sell it today you would lose (1,500) from holding Dan Hotels or give up 0.65% of portfolio value over 90 days.

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

Dan Hotels  vs.  Bio Meat Foodtech

Dan Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dan Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bio Meat Foodtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Meat Foodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bio Meat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dan Hotels and Bio Meat

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

The idea behind Dan Hotels and Bio Meat Foodtech 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.