Correlation Between Sotherly Hotels and INDUSTRIAL MINERALS

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

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

Diversification Opportunities for Sotherly Hotels and INDUSTRIAL MINERALS

-0.69

Correlation Coefficient

Sotherly Hotels  INDUSTRIAL MINERALS

Excellent diversification

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

Pair Corralation between Sotherly Hotels and INDUSTRIAL MINERALS

Assuming the 90 days horizon Sotherly Hotels is expected to generate 0.85 times more return on investment than INDUSTRIAL MINERALS. However, Sotherly Hotels is 1.18 times less risky than INDUSTRIAL MINERALS. It trades about 0.1 of its potential returns per unit of risk. INDUSTRIAL MINERALS LTD is currently generating about 0.07 per unit of risk. If you would invest  70.00  in Sotherly Hotels on April 10, 2025 and sell it today you would earn a total of  6.00  from holding Sotherly Hotels or generate 8.57% return on investment over 90 days.

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

Sotherly Hotels  vs.  INDUSTRIAL MINERALS LTD

Sotherly Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sotherly Hotels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sotherly Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

INDUSTRIAL MINERALS LTD

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sotherly Hotels and INDUSTRIAL MINERALS

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

The idea behind Sotherly Hotels and INDUSTRIAL MINERALS LTD 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.