Correlation Between Jat Holdings and Hotel Sigiriya

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

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

Diversification Opportunities for Jat Holdings and Hotel Sigiriya

0.0

Correlation Coefficient

Jat Holdings  Hotel Sigiriya

Pay attention - limited upside

The 3 months correlation between Jat and Hotel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Jat Holdings PLC and Hotel Sigiriya PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Sigiriya PLC and Jat Holdings 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 Jat Holdings PLC are associated (or correlated) with Hotel Sigiriya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Sigiriya PLC has no effect on the direction of Jat Holdings i.e., Jat Holdings and Hotel Sigiriya go up and down completely randomly.

Pair Corralation between Jat Holdings and Hotel Sigiriya

If you would invest  4,390  in Hotel Sigiriya PLC on September 17, 2024 and sell it today you would earn a total of  3,180  from holding Hotel Sigiriya PLC or generate 72.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Jat Holdings PLC  vs.  Hotel Sigiriya PLC

Jat Holdings PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hotel Sigiriya PLC

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Sigiriya PLC are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hotel Sigiriya sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jat Holdings and Hotel Sigiriya

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

The idea behind Jat Holdings PLC and Hotel Sigiriya PLC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.