Correlation Between Bigbloc Construction and Kamat Hotels
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By analyzing existing cross correlation between Bigbloc Construction Limited and Kamat Hotels Limited, you can compare the effects of market volatilities on Bigbloc Construction and Kamat 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 Bigbloc Construction with a short position of Kamat Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bigbloc Construction and Kamat Hotels.
Diversification Opportunities for Bigbloc Construction and Kamat Hotels
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bigbloc and Kamat is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bigbloc Construction Limited and Kamat Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kamat Hotels Limited and Bigbloc Construction 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 Bigbloc Construction Limited are associated (or correlated) with Kamat Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kamat Hotels Limited has no effect on the direction of Bigbloc Construction i.e., Bigbloc Construction and Kamat Hotels go up and down completely randomly.
Pair Corralation between Bigbloc Construction and Kamat Hotels
Assuming the 90 days trading horizon Bigbloc Construction Limited is expected to under-perform the Kamat Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Bigbloc Construction Limited is 2.2 times less risky than Kamat Hotels. The stock trades about -0.76 of its potential returns per unit of risk. The Kamat Hotels Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 21,530 in Kamat Hotels Limited on November 21, 2024 and sell it today you would earn a total of 4,233 from holding Kamat Hotels Limited or generate 19.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bigbloc Construction Limited vs. Kamat Hotels Limited
Performance |
Timeline |
Bigbloc Construction |
Kamat Hotels Limited |
Bigbloc Construction and Kamat Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bigbloc Construction and Kamat Hotels
The main advantage of trading using opposite Bigbloc Construction and Kamat Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bigbloc Construction position performs unexpectedly, Kamat 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 Kamat Hotels will offset losses from the drop in Kamat Hotels' long position.The idea behind Bigbloc Construction Limited and Kamat Hotels 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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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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