Correlation Between Serendib Hotels and Dolphin Hotels

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Serendib Hotels and Dolphin 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 Serendib Hotels and Dolphin Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Serendib Hotels PLC and Dolphin Hotels PLC, you can compare the effects of market volatilities on Serendib Hotels and Dolphin 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 Serendib Hotels with a short position of Dolphin Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Serendib Hotels and Dolphin Hotels.

Diversification Opportunities for Serendib Hotels and Dolphin Hotels

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Serendib and Dolphin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Serendib Hotels PLC and Dolphin Hotels PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Hotels PLC and Serendib 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 Serendib Hotels PLC are associated (or correlated) with Dolphin Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Hotels PLC has no effect on the direction of Serendib Hotels i.e., Serendib Hotels and Dolphin Hotels go up and down completely randomly.

Pair Corralation between Serendib Hotels and Dolphin Hotels

Assuming the 90 days trading horizon Serendib Hotels is expected to generate 1.02 times less return on investment than Dolphin Hotels. But when comparing it to its historical volatility, Serendib Hotels PLC is 1.04 times less risky than Dolphin Hotels. It trades about 0.36 of its potential returns per unit of risk. Dolphin Hotels PLC is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  3,190  in Dolphin Hotels PLC on September 16, 2024 and sell it today you would earn a total of  2,110  from holding Dolphin Hotels PLC or generate 66.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Serendib Hotels PLC  vs.  Dolphin Hotels PLC

 Performance 
       Timeline  
Serendib Hotels PLC 

Risk-Adjusted Performance

28 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Serendib Hotels PLC are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Serendib Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.
Dolphin Hotels PLC 

Risk-Adjusted Performance

27 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Dolphin Hotels PLC are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dolphin Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Serendib Hotels and Dolphin Hotels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Serendib Hotels and Dolphin Hotels

The main advantage of trading using opposite Serendib Hotels and Dolphin Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Serendib Hotels position performs unexpectedly, Dolphin 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 Dolphin Hotels will offset losses from the drop in Dolphin Hotels' long position.
The idea behind Serendib Hotels PLC and Dolphin Hotels 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

Other Complementary Tools

Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites