Correlation Between Man Infraconstructio and Chalet Hotels

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

Diversification Opportunities for Man Infraconstructio and Chalet Hotels

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Man and Chalet is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Man Infraconstruction Limited and Chalet Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalet Hotels Limited and Man Infraconstructio 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 Man Infraconstruction Limited are associated (or correlated) with Chalet Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalet Hotels Limited has no effect on the direction of Man Infraconstructio i.e., Man Infraconstructio and Chalet Hotels go up and down completely randomly.

Pair Corralation between Man Infraconstructio and Chalet Hotels

Assuming the 90 days trading horizon Man Infraconstruction Limited is expected to generate 1.56 times more return on investment than Chalet Hotels. However, Man Infraconstructio is 1.56 times more volatile than Chalet Hotels Limited. It trades about -0.26 of its potential returns per unit of risk. Chalet Hotels Limited is currently generating about -0.62 per unit of risk. If you would invest  24,422  in Man Infraconstruction Limited on October 26, 2024 and sell it today you would lose (3,416) from holding Man Infraconstruction Limited or give up 13.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Man Infraconstruction Limited  vs.  Chalet Hotels Limited

 Performance 
       Timeline  
Man Infraconstruction 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Man Infraconstruction Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Man Infraconstructio reported solid returns over the last few months and may actually be approaching a breakup point.
Chalet Hotels Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Chalet Hotels Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Chalet Hotels is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Man Infraconstructio and Chalet Hotels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Man Infraconstructio and Chalet Hotels

The main advantage of trading using opposite Man Infraconstructio and Chalet Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Man Infraconstructio position performs unexpectedly, Chalet 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 Chalet Hotels will offset losses from the drop in Chalet Hotels' long position.
The idea behind Man Infraconstruction Limited and Chalet 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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