Correlation Between Oriental Hotels and Sanginita Chemicals

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

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

Diversification Opportunities for Oriental Hotels and Sanginita Chemicals

0.08

Correlation Coefficient

Oriental Hotels  Sanginita Chemicals

Significant diversification

The 3 months correlation between Oriental and Sanginita is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Hotels Limited and Sanginita Chemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanginita Chemicals and Oriental Hotels 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 Oriental Hotels Limited are associated (or correlated) with Sanginita Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanginita Chemicals has no effect on the direction of Oriental Hotels i.e., Oriental Hotels and Sanginita Chemicals go up and down completely randomly.

Pair Corralation between Oriental Hotels and Sanginita Chemicals

Assuming the 90 days trading horizon Oriental Hotels Limited is expected to generate 0.75 times more return on investment than Sanginita Chemicals. However, Oriental Hotels Limited is 1.33 times less risky than Sanginita Chemicals. It trades about 0.08 of its potential returns per unit of risk. Sanginita Chemicals Limited is currently generating about -0.01 per unit of risk. If you would invest  7,084  in Oriental Hotels Limited on September 25, 2024 and sell it today you would earn a total of  10,692  from holding Oriental Hotels Limited or generate 150.93% return on investment over 90 days.

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

Oriental Hotels Limited  vs.  Sanginita Chemicals Limited

Oriental Hotels

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Hotels Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Oriental Hotels is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Sanginita Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanginita Chemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Sanginita Chemicals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Oriental Hotels and Sanginita Chemicals

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

The idea behind Oriental Hotels Limited and Sanginita Chemicals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.