Correlation Between HNB Finance and Renuka City

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

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

Diversification Opportunities for HNB Finance and Renuka City

-0.63

Correlation Coefficient

HNB Finance  Renuka City

Excellent diversification

The 3 months correlation between HNB and Renuka is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding HNB Finance and Renuka City Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renuka City Hotel and HNB Finance 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 HNB Finance are associated (or correlated) with Renuka City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renuka City Hotel has no effect on the direction of HNB Finance i.e., HNB Finance and Renuka City go up and down completely randomly.

Pair Corralation between HNB Finance and Renuka City

Assuming the 90 days trading horizon HNB Finance is expected to under-perform the Renuka City. In addition to that, HNB Finance is 2.96 times more volatile than Renuka City Hotel. It trades about -0.08 of its total potential returns per unit of risk. Renuka City Hotel is currently generating about 0.12 per unit of volatility. If you would invest  39,000  in Renuka City Hotel on September 28, 2024 and sell it today you would earn a total of  2,000  from holding Renuka City Hotel or generate 5.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

HNB Finance  vs.  Renuka City Hotel

HNB Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HNB Finance 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.

Renuka City Hotel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Renuka City Hotel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Renuka City may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HNB Finance and Renuka City

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

The idea behind HNB Finance and Renuka City Hotel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.