Correlation Between MIRC Electronics and SINCLAIRS HOTELS

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

By analyzing existing cross correlation between MIRC Electronics Limited and SINCLAIRS HOTELS ORD, you can compare the effects of market volatilities on MIRC Electronics and SINCLAIRS HOTELS 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 MIRC Electronics with a short position of SINCLAIRS HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIRC Electronics and SINCLAIRS HOTELS.

Diversification Opportunities for MIRC Electronics and SINCLAIRS HOTELS

0.5

Correlation Coefficient

MIRC Electronics  SINCLAIRS HOTELS

Very weak diversification

The 3 months correlation between MIRC and SINCLAIRS is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MIRC Electronics Limited and SINCLAIRS HOTELS ORD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINCLAIRS HOTELS ORD and MIRC Electronics 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 MIRC Electronics Limited are associated (or correlated) with SINCLAIRS HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINCLAIRS HOTELS ORD has no effect on the direction of MIRC Electronics i.e., MIRC Electronics and SINCLAIRS HOTELS go up and down completely randomly.

Pair Corralation between MIRC Electronics and SINCLAIRS HOTELS

Assuming the 90 days trading horizon MIRC Electronics is expected to generate 2.31 times less return on investment than SINCLAIRS HOTELS. But when comparing it to its historical volatility, MIRC Electronics Limited is 1.27 times less risky than SINCLAIRS HOTELS. It trades about 0.22 of its potential returns per unit of risk. SINCLAIRS HOTELS ORD is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  8,880  in SINCLAIRS HOTELS ORD on September 24, 2024 and sell it today you would earn a total of  3,752  from holding SINCLAIRS HOTELS ORD or generate 42.25% return on investment over 90 days.

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

MIRC Electronics Limited  vs.  SINCLAIRS HOTELS ORD

MIRC Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIRC Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, MIRC Electronics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SINCLAIRS HOTELS ORD

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SINCLAIRS HOTELS ORD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, SINCLAIRS HOTELS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MIRC Electronics and SINCLAIRS HOTELS

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

The idea behind MIRC Electronics Limited and SINCLAIRS HOTELS ORD 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.