Correlation Between KNR Constructions and Samhi Hotels

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Can any of the company-specific risk be diversified away by investing in both KNR Constructions 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 KNR Constructions and Samhi Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KNR Constructions Limited and Samhi Hotels Limited, you can compare the effects of market volatilities on KNR Constructions 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 KNR Constructions with a short position of Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNR Constructions and Samhi Hotels.

Diversification Opportunities for KNR Constructions and Samhi Hotels

KNRSamhiDiversified AwayKNRSamhiDiversified Away100%
0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between KNR and Samhi is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding KNR Constructions Limited 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 KNR Constructions 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 KNR Constructions Limited 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 KNR Constructions i.e., KNR Constructions and Samhi Hotels go up and down completely randomly.

Pair Corralation between KNR Constructions and Samhi Hotels

Assuming the 90 days trading horizon KNR Constructions Limited is expected to under-perform the Samhi Hotels. But the stock apears to be less risky and, when comparing its historical volatility, KNR Constructions Limited is 1.22 times less risky than Samhi Hotels. The stock trades about -0.41 of its potential returns per unit of risk. The Samhi Hotels Limited is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest  17,970  in Samhi Hotels Limited on November 29, 2024 and sell it today you would lose (2,911) from holding Samhi Hotels Limited or give up 16.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

KNR Constructions Limited  vs.  Samhi Hotels Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15KNRCON SAMHI
       Timeline  
KNR Constructions 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days KNR Constructions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15JanFebFeb240260280300320340360
Samhi Hotels Limited 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Samhi Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15JanFebFeb150160170180190200210

KNR Constructions and Samhi Hotels Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.98-2.98-1.98-0.980.00.81.622.443.26 0.0450.0500.0550.0600.0650.0700.075
JavaScript chart by amCharts 3.21.15KNRCON SAMHI
       Returns  

Pair Trading with KNR Constructions and Samhi Hotels

The main advantage of trading using opposite KNR Constructions and Samhi Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNR Constructions 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 KNR Constructions Limited 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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