Correlation Between Byke Hospitality and HEG
Can any of the company-specific risk be diversified away by investing in both Byke Hospitality and HEG 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 Byke Hospitality and HEG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Byke Hospitality and HEG Limited, you can compare the effects of market volatilities on Byke Hospitality and HEG 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 Byke Hospitality with a short position of HEG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byke Hospitality and HEG.
Diversification Opportunities for Byke Hospitality and HEG
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Byke and HEG is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Byke Hospitality and HEG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEG Limited and Byke Hospitality 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 The Byke Hospitality are associated (or correlated) with HEG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEG Limited has no effect on the direction of Byke Hospitality i.e., Byke Hospitality and HEG go up and down completely randomly.
Pair Corralation between Byke Hospitality and HEG
Assuming the 90 days trading horizon The Byke Hospitality is expected to generate 1.04 times more return on investment than HEG. However, Byke Hospitality is 1.04 times more volatile than HEG Limited. It trades about -0.11 of its potential returns per unit of risk. HEG Limited is currently generating about -0.35 per unit of risk. If you would invest 9,607 in The Byke Hospitality on October 23, 2024 and sell it today you would lose (663.00) from holding The Byke Hospitality or give up 6.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
The Byke Hospitality vs. HEG Limited
Performance |
| Timeline |
| Byke Hospitality |
| HEG Limited |
Byke Hospitality and HEG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byke Hospitality and HEG
The main advantage of trading using opposite Byke Hospitality and HEG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byke Hospitality position performs unexpectedly, HEG 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 HEG will offset losses from the drop in HEG's long position.| Byke Hospitality vs. Reliance Industries Limited | Byke Hospitality vs. Life Insurance | Byke Hospitality vs. Indian Oil | Byke Hospitality vs. Oil Natural Gas |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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