Correlation Between Robust Hotels and Tree House

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

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

Diversification Opportunities for Robust Hotels and Tree House

-0.86

Correlation Coefficient

Robust Hotels  Tree House

Pay attention - limited upside

The 3 months correlation between Robust and Tree is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Robust Hotels Limited and Tree House Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree House Education and Robust 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 Robust Hotels Limited are associated (or correlated) with Tree House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree House Education has no effect on the direction of Robust Hotels i.e., Robust Hotels and Tree House go up and down completely randomly.

Pair Corralation between Robust Hotels and Tree House

Assuming the 90 days trading horizon Robust Hotels Limited is expected to generate 1.19 times more return on investment than Tree House. However, Robust Hotels is 1.19 times more volatile than Tree House Education. It trades about 0.18 of its potential returns per unit of risk. Tree House Education is currently generating about -0.18 per unit of risk. If you would invest  22,000  in Robust Hotels Limited on April 25, 2025 and sell it today you would earn a total of  6,720  from holding Robust Hotels Limited or generate 30.55% return on investment over 90 days.

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

Robust Hotels Limited  vs.  Tree House Education

Robust Hotels Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Robust Hotels Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Robust Hotels exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tree House Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tree House Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Robust Hotels and Tree House

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

The idea behind Robust Hotels Limited and Tree House Education 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.