Correlation Between Oriental Hotels and Spentex Industries

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

Diversification Opportunities for Oriental Hotels and Spentex Industries

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Oriental and Spentex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Hotels Limited and Spentex Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spentex Industries and Oriental Hotels 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 Oriental Hotels Limited are associated (or correlated) with Spentex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spentex Industries has no effect on the direction of Oriental Hotels i.e., Oriental Hotels and Spentex Industries go up and down completely randomly.

Pair Corralation between Oriental Hotels and Spentex Industries

If you would invest  18,069  in Oriental Hotels Limited on August 31, 2024 and sell it today you would earn a total of  39.00  from holding Oriental Hotels Limited or generate 0.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Oriental Hotels Limited  vs.  Spentex Industries Limited

 Performance 
       Timeline  
Oriental Hotels 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Hotels Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Oriental Hotels demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Spentex Industries 

Risk-Adjusted Performance

0 of 100

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

Oriental Hotels and Spentex Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oriental Hotels and Spentex Industries

The main advantage of trading using opposite Oriental Hotels and Spentex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Hotels position performs unexpectedly, Spentex Industries 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 Spentex Industries will offset losses from the drop in Spentex Industries' long position.
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The idea behind Oriental Hotels Limited and Spentex Industries 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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