Correlation Between EIH Associated and India Tourism

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

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

Diversification Opportunities for EIH Associated and India Tourism

0.69

Correlation Coefficient

EIH Associated  India Tourism

Poor diversification

The 3 months correlation between EIH and India is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding EIH Associated Hotels and India Tourism Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Tourism Development and EIH Associated 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 EIH Associated Hotels are associated (or correlated) with India Tourism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Tourism Development has no effect on the direction of EIH Associated i.e., EIH Associated and India Tourism go up and down completely randomly.

Pair Corralation between EIH Associated and India Tourism

Assuming the 90 days trading horizon EIH Associated is expected to generate 1.55 times less return on investment than India Tourism. But when comparing it to its historical volatility, EIH Associated Hotels is 1.37 times less risky than India Tourism. It trades about 0.05 of its potential returns per unit of risk. India Tourism Development is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  32,649  in India Tourism Development on April 1, 2025 and sell it today you would earn a total of  27,476  from holding India Tourism Development or generate 84.16% return on investment over 90 days.

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

EIH Associated Hotels  vs.  India Tourism Development

EIH Associated Hotels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EIH Associated Hotels are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, EIH Associated may actually be approaching a critical reversion point that can send shares even higher in July 2025.

India Tourism Development

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in India Tourism Development are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, India Tourism is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EIH Associated and India Tourism

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

The idea behind EIH Associated Hotels and India Tourism Development 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.