Correlation Between Indian Hotels and Manali Petrochemicals

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

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

Diversification Opportunities for Indian Hotels and Manali Petrochemicals

-0.34

Correlation Coefficient

Indian Hotels  Manali Petrochemicals

Very good diversification

The 3 months correlation between Indian and Manali is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Indian Hotels and Manali Petrochemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manali Petrochemicals and Indian 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 The Indian Hotels are associated (or correlated) with Manali Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manali Petrochemicals has no effect on the direction of Indian Hotels i.e., Indian Hotels and Manali Petrochemicals go up and down completely randomly.

Pair Corralation between Indian Hotels and Manali Petrochemicals

Assuming the 90 days trading horizon The Indian Hotels is expected to under-perform the Manali Petrochemicals. But the stock apears to be less risky and, when comparing its historical volatility, The Indian Hotels is 1.78 times less risky than Manali Petrochemicals. The stock trades about -0.02 of its potential returns per unit of risk. The Manali Petrochemicals Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5,602  in Manali Petrochemicals Limited on April 25, 2025 and sell it today you would earn a total of  2,016  from holding Manali Petrochemicals Limited or generate 35.99% return on investment over 90 days.

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

The Indian Hotels  vs.  Manali Petrochemicals Limited

Indian Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Indian Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Indian Hotels is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Manali Petrochemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manali Petrochemicals Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Manali Petrochemicals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indian Hotels and Manali Petrochemicals

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

The idea behind The Indian Hotels and Manali Petrochemicals 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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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.