Correlation Between Nalwa Sons and Samhi Hotels

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

By analyzing existing cross correlation between Nalwa Sons Investments and Samhi Hotels Limited, you can compare the effects of market volatilities on Nalwa Sons and Samhi 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 Nalwa Sons with a short position of Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nalwa Sons and Samhi Hotels.

Diversification Opportunities for Nalwa Sons and Samhi Hotels

-0.78

Correlation Coefficient

Nalwa Sons  Samhi Hotels

Pay attention - limited upside

The 3 months correlation between Nalwa and Samhi is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nalwa Sons Investments and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited and Nalwa Sons 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 Nalwa Sons Investments are associated (or correlated) with Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of Nalwa Sons i.e., Nalwa Sons and Samhi Hotels go up and down completely randomly.

Pair Corralation between Nalwa Sons and Samhi Hotels

Assuming the 90 days trading horizon Nalwa Sons Investments is expected to generate 1.48 times more return on investment than Samhi Hotels. However, Nalwa Sons is 1.48 times more volatile than Samhi Hotels Limited. It trades about 0.13 of its potential returns per unit of risk. Samhi Hotels Limited is currently generating about 0.02 per unit of risk. If you would invest  314,715  in Nalwa Sons Investments on September 4, 2024 and sell it today you would earn a total of  495,690  from holding Nalwa Sons Investments or generate 157.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Nalwa Sons Investments  vs.  Samhi Hotels Limited

Nalwa Sons Investments

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nalwa Sons Investments are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Nalwa Sons unveiled solid returns over the last few months and may actually be approaching a breakup point.

Samhi Hotels Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhi Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nalwa Sons and Samhi Hotels

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

The idea behind Nalwa Sons Investments and Samhi Hotels Limited 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 Stocks Directory module to find actively traded stocks across global markets.