Correlation Between Soken Chemical and INTERCONT HOTELS

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

By analyzing existing cross correlation between Soken Chemical Engineering and INTERCONT HOTELS, you can compare the effects of market volatilities on Soken Chemical and INTERCONT 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 Soken Chemical with a short position of INTERCONT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soken Chemical and INTERCONT HOTELS.

Diversification Opportunities for Soken Chemical and INTERCONT HOTELS

0.0

Correlation Coefficient

Soken Chemical  INTERCONT HOTELS

Pay attention - limited upside

The 3 months correlation between Soken and INTERCONT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Soken Chemical Engineering and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and Soken Chemical 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 Soken Chemical Engineering are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of Soken Chemical i.e., Soken Chemical and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between Soken Chemical and INTERCONT HOTELS

If you would invest  8,800  in INTERCONT HOTELS on September 5, 2024 and sell it today you would earn a total of  2,900  from holding INTERCONT HOTELS or generate 32.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Soken Chemical Engineering  vs.  INTERCONT HOTELS

Soken Chemical Engin

Risk-Adjusted Performance

0 of 100

Very Weak

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

INTERCONT HOTELS

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soken Chemical and INTERCONT HOTELS

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

The idea behind Soken Chemical Engineering and INTERCONT HOTELS 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.