Correlation Between Samhi Hotels and JB Chemicals

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

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

Diversification Opportunities for Samhi Hotels and JB Chemicals

0.4

Correlation Coefficient

Samhi Hotels  JB Chemicals

Very weak diversification

The 3 months correlation between Samhi and JBCHEPHARM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Samhi Hotels Limited and JB Chemicals Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Chemicals Pharmac and Samhi 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 Samhi Hotels Limited are associated (or correlated) with JB Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Chemicals Pharmac has no effect on the direction of Samhi Hotels i.e., Samhi Hotels and JB Chemicals go up and down completely randomly.

Pair Corralation between Samhi Hotels and JB Chemicals

Assuming the 90 days trading horizon Samhi Hotels Limited is expected to generate 1.12 times more return on investment than JB Chemicals. However, Samhi Hotels is 1.12 times more volatile than JB Chemicals Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. JB Chemicals Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  21,169  in Samhi Hotels Limited on September 17, 2024 and sell it today you would lose (269.00) from holding Samhi Hotels Limited or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Samhi Hotels Limited  vs.  JB Chemicals Pharmaceuticals

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 very healthy primary indicators, Samhi Hotels is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

JB Chemicals Pharmac

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Samhi Hotels and JB Chemicals

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

The idea behind Samhi Hotels Limited and JB Chemicals Pharmaceuticals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.