Correlation Between Pyramisa Hotels and Al Khair

Can any of the company-specific risk be diversified away by investing in both Pyramisa Hotels and Al Khair 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 Pyramisa Hotels and Al Khair into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pyramisa Hotels and Al Khair River, you can compare the effects of market volatilities on Pyramisa Hotels and Al Khair 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 Pyramisa Hotels with a short position of Al Khair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyramisa Hotels and Al Khair.

Diversification Opportunities for Pyramisa Hotels and Al Khair

-0.62

Correlation Coefficient

Pyramisa Hotels  Al Khair

Excellent diversification

The 3 months correlation between Pyramisa and KRDI is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pyramisa Hotels and Al Khair River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Khair River and Pyramisa 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 Pyramisa Hotels are associated (or correlated) with Al Khair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Khair River has no effect on the direction of Pyramisa Hotels i.e., Pyramisa Hotels and Al Khair go up and down completely randomly.

Pair Corralation between Pyramisa Hotels and Al Khair

Assuming the 90 days trading horizon Pyramisa Hotels is expected to under-perform the Al Khair. But the stock apears to be less risky and, when comparing its historical volatility, Pyramisa Hotels is 2.27 times less risky than Al Khair. The stock trades about -0.24 of its potential returns per unit of risk. The Al Khair River is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Al Khair River on September 16, 2024 and sell it today you would lose (1.00) from holding Al Khair River or give up 1.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Pyramisa Hotels  vs.  Al Khair River

Pyramisa Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyramisa Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Al Khair River

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Al Khair River are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Al Khair reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pyramisa Hotels and Al Khair

The main advantage of trading using opposite Pyramisa Hotels and Al Khair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyramisa Hotels position performs unexpectedly, Al Khair 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 Al Khair will offset losses from the drop in Al Khair's long position.

The idea behind Pyramisa Hotels and Al Khair River 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.