Correlation Between SINCLAIRS HOTELS and AAA Technologies

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

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

Diversification Opportunities for SINCLAIRS HOTELS and AAA Technologies

0.49

Correlation Coefficient

SINCLAIRS HOTELS  AAA Technologies

Very weak diversification

The 3 months correlation between SINCLAIRS and AAA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding SINCLAIRS HOTELS ORD and AAA Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAA Technologies and SINCLAIRS 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 SINCLAIRS HOTELS ORD are associated (or correlated) with AAA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAA Technologies has no effect on the direction of SINCLAIRS HOTELS i.e., SINCLAIRS HOTELS and AAA Technologies go up and down completely randomly.

Pair Corralation between SINCLAIRS HOTELS and AAA Technologies

Assuming the 90 days trading horizon SINCLAIRS HOTELS ORD is expected to under-perform the AAA Technologies. But the stock apears to be less risky and, when comparing its historical volatility, SINCLAIRS HOTELS ORD is 1.57 times less risky than AAA Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The AAA Technologies Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,270  in AAA Technologies Limited on September 4, 2024 and sell it today you would earn a total of  3,276  from holding AAA Technologies Limited or generate 39.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	65.98%
Values	Daily Returns

SINCLAIRS HOTELS ORD  vs.  AAA Technologies Limited

SINCLAIRS HOTELS ORD

Risk-Adjusted Performance

0 of 100

Very Weak

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

AAA Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SINCLAIRS HOTELS and AAA Technologies

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

The idea behind SINCLAIRS HOTELS ORD and AAA Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.