Correlation Between Samhi Hotels and Computer Age
Can any of the company-specific risk be diversified away by investing in both Samhi Hotels and Computer Age 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 Samhi Hotels and Computer Age into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samhi Hotels Limited and Computer Age Management, you can compare the effects of market volatilities on Samhi Hotels and Computer Age 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 Samhi Hotels with a short position of Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhi Hotels and Computer Age.
Diversification Opportunities for Samhi Hotels and Computer Age
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samhi and Computer is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samhi Hotels Limited and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and Samhi 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 Samhi Hotels Limited are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of Samhi Hotels i.e., Samhi Hotels and Computer Age go up and down completely randomly.
Pair Corralation between Samhi Hotels and Computer Age
Assuming the 90 days trading horizon Samhi Hotels Limited is expected to generate 0.88 times more return on investment than Computer Age. However, Samhi Hotels Limited is 1.13 times less risky than Computer Age. It trades about -0.05 of its potential returns per unit of risk. Computer Age Management is currently generating about -0.05 per unit of risk. If you would invest 20,824 in Samhi Hotels Limited on November 2, 2024 and sell it today you would lose (2,834) from holding Samhi Hotels Limited or give up 13.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samhi Hotels Limited vs. Computer Age Management
Performance |
| Timeline |
| Samhi Hotels Limited |
| Computer Age Management |
Samhi Hotels and Computer Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samhi Hotels and Computer Age
The main advantage of trading using opposite Samhi Hotels and Computer Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhi Hotels position performs unexpectedly, Computer Age 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 Computer Age will offset losses from the drop in Computer Age's long position.| Samhi Hotels vs. KNR Constructions Limited | Samhi Hotels vs. Action Construction Equipment | Samhi Hotels vs. 21st Century Management | Samhi Hotels vs. Shaily Engineering Plastics |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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