Correlation Between DALATA HOTEL and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both DALATA HOTEL and Sunstone Hotel 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 DALATA HOTEL and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DALATA HOTEL and Sunstone Hotel Investors, you can compare the effects of market volatilities on DALATA HOTEL and Sunstone Hotel 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 DALATA HOTEL with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of DALATA HOTEL and Sunstone Hotel.
Diversification Opportunities for DALATA HOTEL and Sunstone Hotel
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DALATA and Sunstone is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding DALATA HOTEL and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors and DALATA HOTEL 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 DALATA HOTEL are associated (or correlated) with Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of DALATA HOTEL i.e., DALATA HOTEL and Sunstone Hotel go up and down completely randomly.
Pair Corralation between DALATA HOTEL and Sunstone Hotel
Assuming the 90 days trading horizon DALATA HOTEL is expected to generate 1.78 times more return on investment than Sunstone Hotel. However, DALATA HOTEL is 1.78 times more volatile than Sunstone Hotel Investors. It trades about 0.08 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about -0.22 per unit of risk. If you would invest 424.00 in DALATA HOTEL on November 6, 2024 and sell it today you would earn a total of 14.00 from holding DALATA HOTEL or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DALATA HOTEL vs. Sunstone Hotel Investors
Performance |
| Timeline |
| DALATA HOTEL |
| Sunstone Hotel Investors |
DALATA HOTEL and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DALATA HOTEL and Sunstone Hotel
The main advantage of trading using opposite DALATA HOTEL and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DALATA HOTEL position performs unexpectedly, Sunstone Hotel 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 Sunstone Hotel will offset losses from the drop in Sunstone Hotel's long position.| DALATA HOTEL vs. Harmony Gold Mining | DALATA HOTEL vs. De Grey Mining | DALATA HOTEL vs. THAI BEVERAGE | DALATA HOTEL vs. MAG SILVER |
| Sunstone Hotel vs. SBM OFFSHORE | Sunstone Hotel vs. Ares Management Corp | Sunstone Hotel vs. STGEORGE MINING LTD | Sunstone Hotel vs. Cardinal Health |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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