Correlation Between ADF Foods and Oriental Hotels
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By analyzing existing cross correlation between ADF Foods Limited and Oriental Hotels Limited, you can compare the effects of market volatilities on ADF Foods and Oriental 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 ADF Foods with a short position of Oriental Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADF Foods and Oriental Hotels.
Diversification Opportunities for ADF Foods and Oriental Hotels
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ADF and Oriental is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ADF Foods Limited and Oriental Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Hotels and ADF Foods 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 ADF Foods Limited are associated (or correlated) with Oriental Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Hotels has no effect on the direction of ADF Foods i.e., ADF Foods and Oriental Hotels go up and down completely randomly.
Pair Corralation between ADF Foods and Oriental Hotels
Assuming the 90 days trading horizon ADF Foods Limited is expected to generate 1.05 times more return on investment than Oriental Hotels. However, ADF Foods is 1.05 times more volatile than Oriental Hotels Limited. It trades about 0.22 of its potential returns per unit of risk. Oriental Hotels Limited is currently generating about 0.02 per unit of risk. If you would invest 29,821 in ADF Foods Limited on September 1, 2024 and sell it today you would earn a total of 3,444 from holding ADF Foods Limited or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADF Foods Limited vs. Oriental Hotels Limited
Performance |
| Timeline |
| ADF Foods Limited |
| Oriental Hotels |
ADF Foods and Oriental Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADF Foods and Oriental Hotels
The main advantage of trading using opposite ADF Foods and Oriental Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADF Foods position performs unexpectedly, Oriental 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 Oriental Hotels will offset losses from the drop in Oriental Hotels' long position.| ADF Foods vs. Kingfa Science Technology | ADF Foods vs. Rico Auto Industries | ADF Foods vs. GACM Technologies Limited | ADF Foods vs. COSMO FIRST LIMITED |
| Oriental Hotels vs. MRF Limited | Oriental Hotels vs. Bosch Limited | Oriental Hotels vs. Bajaj Holdings Investment | Oriental Hotels vs. Vardhman Holdings Limited |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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