Correlation Between Dalata Hotel and PROSPECT

Can any of the company-specific risk be diversified away by investing in both Dalata Hotel and PROSPECT 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 PROSPECT 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 PROSPECT CAP P, you can compare the effects of market volatilities on Dalata Hotel and PROSPECT 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 PROSPECT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalata Hotel and PROSPECT.

Diversification Opportunities for Dalata Hotel and PROSPECT

0.26

Correlation Coefficient

Dalata Hotel  PROSPECT

Modest diversification

The 3 months correlation between Dalata and PROSPECT is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and PROSPECT CAP P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSPECT CAP P 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 PROSPECT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSPECT CAP P has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and PROSPECT go up and down completely randomly.

Pair Corralation between Dalata Hotel and PROSPECT

Assuming the 90 days horizon Dalata Hotel is expected to generate 1.92 times less return on investment than PROSPECT. But when comparing it to its historical volatility, Dalata Hotel Group is 24.2 times less risky than PROSPECT. It trades about 0.13 of its potential returns per unit of risk. PROSPECT CAP P is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,879  in PROSPECT CAP P on August 31, 2024 and sell it today you would lose (13.00) from holding PROSPECT CAP P or give up 0.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	42.86%
Values	Daily Returns

Dalata Hotel Group  vs.  PROSPECT CAP P

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

PROSPECT CAP P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dalata Hotel and PROSPECT

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

The idea behind Dalata Hotel Group and PROSPECT CAP P 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.