Correlation Between Indian Oil and EIH Associated
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By analyzing existing cross correlation between Indian Oil and EIH Associated Hotels, you can compare the effects of market volatilities on Indian Oil and EIH Associated 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 Indian Oil with a short position of EIH Associated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and EIH Associated.
Diversification Opportunities for Indian Oil and EIH Associated
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indian and EIH is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil and EIH Associated Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIH Associated Hotels and Indian Oil 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 Indian Oil are associated (or correlated) with EIH Associated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIH Associated Hotels has no effect on the direction of Indian Oil i.e., Indian Oil and EIH Associated go up and down completely randomly.
Pair Corralation between Indian Oil and EIH Associated
Assuming the 90 days trading horizon Indian Oil is expected to generate 2.31 times less return on investment than EIH Associated. But when comparing it to its historical volatility, Indian Oil is 3.58 times less risky than EIH Associated. It trades about 0.07 of its potential returns per unit of risk. EIH Associated Hotels is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 22,163 in EIH Associated Hotels on August 25, 2024 and sell it today you would earn a total of 16,197 from holding EIH Associated Hotels or generate 73.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.59% |
Values | Daily Returns |
Indian Oil vs. EIH Associated Hotels
Performance |
Timeline |
Indian Oil |
EIH Associated Hotels |
Indian Oil and EIH Associated Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indian Oil and EIH Associated
The main advantage of trading using opposite Indian Oil and EIH Associated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Oil position performs unexpectedly, EIH Associated 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 EIH Associated will offset losses from the drop in EIH Associated's long position.Indian Oil vs. Univa Foods Limited | Indian Oil vs. Mrs Bectors Food | Indian Oil vs. Advani Hotels Resorts | Indian Oil vs. SINCLAIRS HOTELS ORD |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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