Correlation Between Asian Hotels and Container

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

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

Diversification Opportunities for Asian Hotels and Container

-0.21

Correlation Coefficient

Asian Hotels  Container

Very good diversification

The 3 months correlation between Asian and Container is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Asian Hotels Limited and Container of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Container and Asian 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 Asian Hotels Limited are associated (or correlated) with Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Container has no effect on the direction of Asian Hotels i.e., Asian Hotels and Container go up and down completely randomly.

Pair Corralation between Asian Hotels and Container

Assuming the 90 days trading horizon Asian Hotels is expected to generate 3.56 times less return on investment than Container. In addition to that, Asian Hotels is 1.01 times more volatile than Container of. It trades about 0.04 of its total potential returns per unit of risk. Container of is currently generating about 0.13 per unit of volatility. If you would invest  52,077  in Container of on April 5, 2025 and sell it today you would earn a total of  7,888  from holding Container of or generate 15.15% return on investment over 90 days.

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

Asian Hotels Limited  vs.  Container of

Asian Hotels Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Hotels Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Asian Hotels is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Container

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Container of are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental indicators, Container sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asian Hotels and Container

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

The idea behind Asian Hotels Limited and Container of 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.