Correlation Between Dalata Hotel and FormFactor

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

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

Diversification Opportunities for Dalata Hotel and FormFactor

-0.1

Correlation Coefficient

Dalata Hotel  FormFactor

Good diversification

The 3 months correlation between Dalata and FormFactor is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor and Dalata Hotel 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 Dalata Hotel Group are associated (or correlated) with FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and FormFactor go up and down completely randomly.

Pair Corralation between Dalata Hotel and FormFactor

Assuming the 90 days horizon Dalata Hotel Group is expected to generate 0.03 times more return on investment than FormFactor. However, Dalata Hotel Group is 31.95 times less risky than FormFactor. It trades about 0.12 of its potential returns per unit of risk. FormFactor is currently generating about 0.0 per unit of risk. If you would invest  484.00  in Dalata Hotel Group on September 5, 2024 and sell it today you would earn a total of  4.00  from holding Dalata Hotel Group or generate 0.83% return on investment over 90 days.

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

Dalata Hotel Group  vs.  FormFactor

Dalata Hotel Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dalata Hotel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

FormFactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FormFactor is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dalata Hotel and FormFactor

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

The idea behind Dalata Hotel Group and FormFactor 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.