Correlation Between Shangri La and DC HEALTHCARE
Can any of the company-specific risk be diversified away by investing in both Shangri La and DC HEALTHCARE 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 Shangri La and DC HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shangri La Hotels and DC HEALTHCARE HOLDINGS, you can compare the effects of market volatilities on Shangri La and DC HEALTHCARE 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 Shangri La with a short position of DC HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and DC HEALTHCARE.
Diversification Opportunities for Shangri La and DC HEALTHCARE
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shangri and 0283 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels and DC HEALTHCARE HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DC HEALTHCARE HOLDINGS and Shangri La 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 Shangri La Hotels are associated (or correlated) with DC HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DC HEALTHCARE HOLDINGS has no effect on the direction of Shangri La i.e., Shangri La and DC HEALTHCARE go up and down completely randomly.
Pair Corralation between Shangri La and DC HEALTHCARE
Assuming the 90 days trading horizon Shangri La is expected to generate 11.7 times less return on investment than DC HEALTHCARE. But when comparing it to its historical volatility, Shangri La Hotels is 3.25 times less risky than DC HEALTHCARE. It trades about 0.02 of its potential returns per unit of risk. DC HEALTHCARE HOLDINGS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16.00 in DC HEALTHCARE HOLDINGS on September 15, 2024 and sell it today you would earn a total of 1.00 from holding DC HEALTHCARE HOLDINGS or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shangri La Hotels vs. DC HEALTHCARE HOLDINGS
Performance |
| Timeline |
| Shangri La Hotels |
| DC HEALTHCARE HOLDINGS |
Shangri La and DC HEALTHCARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shangri La and DC HEALTHCARE
The main advantage of trading using opposite Shangri La and DC HEALTHCARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La position performs unexpectedly, DC HEALTHCARE 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 DC HEALTHCARE will offset losses from the drop in DC HEALTHCARE's long position.| Shangri La vs. Binasat Communications Bhd | Shangri La vs. Press Metal Bhd | Shangri La vs. Computer Forms Bhd | Shangri La vs. Senheng New Retail |
| DC HEALTHCARE vs. Shangri La Hotels | DC HEALTHCARE vs. Riverview Rubber Estates | DC HEALTHCARE vs. Lotte Chemical Titan | DC HEALTHCARE vs. Malayan Banking Bhd |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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