Correlation Between SINCLAIRS HOTELS and DCM Financial

Can any of the company-specific risk be diversified away by investing in both SINCLAIRS HOTELS and DCM Financial 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 DCM Financial 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 DCM Financial Services, you can compare the effects of market volatilities on SINCLAIRS HOTELS and DCM Financial 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 DCM Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINCLAIRS HOTELS and DCM Financial.

Diversification Opportunities for SINCLAIRS HOTELS and DCM Financial

0.39

Correlation Coefficient

SINCLAIRS HOTELS  DCM Financial

Weak diversification

The 3 months correlation between SINCLAIRS and DCM is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SINCLAIRS HOTELS ORD and DCM Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCM Financial Services 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 DCM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCM Financial Services has no effect on the direction of SINCLAIRS HOTELS i.e., SINCLAIRS HOTELS and DCM Financial go up and down completely randomly.

Pair Corralation between SINCLAIRS HOTELS and DCM Financial

Assuming the 90 days trading horizon SINCLAIRS HOTELS ORD is expected to generate 1.44 times more return on investment than DCM Financial. However, SINCLAIRS HOTELS is 1.44 times more volatile than DCM Financial Services. It trades about 0.26 of its potential returns per unit of risk. DCM Financial Services is currently generating about 0.05 per unit of risk. If you would invest  9,139  in SINCLAIRS HOTELS ORD on September 30, 2024 and sell it today you would earn a total of  3,726  from holding SINCLAIRS HOTELS ORD or generate 40.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SINCLAIRS HOTELS ORD  vs.  DCM Financial Services

SINCLAIRS HOTELS ORD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SINCLAIRS HOTELS ORD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, SINCLAIRS HOTELS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

DCM Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DCM Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, DCM Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SINCLAIRS HOTELS and DCM Financial

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

The idea behind SINCLAIRS HOTELS ORD and DCM Financial Services 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.