Correlation Between EIH Associated and Alkali Metals
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By analyzing existing cross correlation between EIH Associated Hotels and Alkali Metals Limited, you can compare the effects of market volatilities on EIH Associated and Alkali Metals 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 EIH Associated with a short position of Alkali Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIH Associated and Alkali Metals.
Diversification Opportunities for EIH Associated and Alkali Metals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EIH and Alkali is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding EIH Associated Hotels and Alkali Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkali Metals Limited and EIH Associated 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 EIH Associated Hotels are associated (or correlated) with Alkali Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkali Metals Limited has no effect on the direction of EIH Associated i.e., EIH Associated and Alkali Metals go up and down completely randomly.
Pair Corralation between EIH Associated and Alkali Metals
Assuming the 90 days trading horizon EIH Associated Hotels is expected to generate 1.19 times more return on investment than Alkali Metals. However, EIH Associated is 1.19 times more volatile than Alkali Metals Limited. It trades about -0.2 of its potential returns per unit of risk. Alkali Metals Limited is currently generating about -0.27 per unit of risk. If you would invest 39,995 in EIH Associated Hotels on November 20, 2024 and sell it today you would lose (5,960) from holding EIH Associated Hotels or give up 14.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
EIH Associated Hotels vs. Alkali Metals Limited
Performance |
Timeline |
EIH Associated Hotels |
Alkali Metals Limited |
EIH Associated and Alkali Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EIH Associated and Alkali Metals
The main advantage of trading using opposite EIH Associated and Alkali Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIH Associated position performs unexpectedly, Alkali Metals 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 Alkali Metals will offset losses from the drop in Alkali Metals' long position.EIH Associated vs. GPT Healthcare | ||
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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