Correlation Between Consolidated Construction and Samhi Hotels
Can any of the company-specific risk be diversified away by investing in both Consolidated Construction and Samhi 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 Consolidated Construction and Samhi Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Construction Consortium and Samhi Hotels Limited, you can compare the effects of market volatilities on Consolidated Construction and Samhi 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 Consolidated Construction with a short position of Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and Samhi Hotels.
Diversification Opportunities for Consolidated Construction and Samhi Hotels
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Consolidated and Samhi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited and Consolidated 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 Consolidated Construction Consortium are associated (or correlated) with Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and Samhi Hotels go up and down completely randomly.
Pair Corralation between Consolidated Construction and Samhi Hotels
Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to under-perform the Samhi Hotels. In addition to that, Consolidated Construction is 1.18 times more volatile than Samhi Hotels Limited. It trades about -0.04 of its total potential returns per unit of risk. Samhi Hotels Limited is currently generating about 0.04 per unit of volatility. If you would invest 19,786 in Samhi Hotels Limited on October 12, 2024 and sell it today you would earn a total of 313.00 from holding Samhi Hotels Limited or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Construction Cons vs. Samhi Hotels Limited
Performance |
| Timeline |
| Consolidated Construction |
| Samhi Hotels Limited |
Consolidated Construction and Samhi Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Construction and Samhi Hotels
The main advantage of trading using opposite Consolidated Construction and Samhi Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction position performs unexpectedly, Samhi 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 Samhi Hotels will offset losses from the drop in Samhi Hotels' long position.The idea behind Consolidated Construction Consortium and Samhi 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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