Correlation Between EIH Associated and Hindustan Foods
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By analyzing existing cross correlation between EIH Associated Hotels and Hindustan Foods Limited, you can compare the effects of market volatilities on EIH Associated and Hindustan Foods 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 Hindustan Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIH Associated and Hindustan Foods.
Diversification Opportunities for EIH Associated and Hindustan Foods
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EIH and Hindustan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding EIH Associated Hotels and Hindustan Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Foods 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 Hindustan Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Foods has no effect on the direction of EIH Associated i.e., EIH Associated and Hindustan Foods go up and down completely randomly.
Pair Corralation between EIH Associated and Hindustan Foods
Assuming the 90 days trading horizon EIH Associated Hotels is expected to generate 4.42 times more return on investment than Hindustan Foods. However, EIH Associated is 4.42 times more volatile than Hindustan Foods Limited. It trades about 0.05 of its potential returns per unit of risk. Hindustan Foods Limited is currently generating about -0.02 per unit of risk. If you would invest 22,728 in EIH Associated Hotels on August 29, 2024 and sell it today you would earn a total of 16,337 from holding EIH Associated Hotels or generate 71.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIH Associated Hotels vs. Hindustan Foods Limited
Performance |
| Timeline |
| EIH Associated Hotels |
| Hindustan Foods |
EIH Associated and Hindustan Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIH Associated and Hindustan Foods
The main advantage of trading using opposite EIH Associated and Hindustan Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIH Associated position performs unexpectedly, Hindustan Foods 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 Hindustan Foods will offset losses from the drop in Hindustan Foods' long position.| EIH Associated vs. Hemisphere Properties India | EIH Associated vs. India Glycols Limited | EIH Associated vs. Indo Borax Chemicals | EIH Associated vs. Kingfa Science Technology |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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