Correlation Between Bigbloc Construction and Kamat Hotels

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Can any of the company-specific risk be diversified away by investing in both Bigbloc Construction and Kamat 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 Bigbloc Construction and Kamat Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
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

BigblocKamatDiversified AwayBigblocKamatDiversified Away100%
-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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bigbloc Construction Limited  vs.  Kamat Hotels Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -2002040
JavaScript chart by amCharts 3.21.15BIGBLOC KAMATHOTEL
       Timeline  
Bigbloc Construction 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Bigbloc Construction Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb60708090100110120
Kamat Hotels Limited 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kamat Hotels Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kamat Hotels displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb200220240260280300320

Bigbloc Construction and Kamat Hotels Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.25-3.93-2.62-1.30.00.971.952.923.9 0.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15BIGBLOC KAMATHOTEL
       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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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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