Correlation Between Royal Orchid and Shangri La

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

By analyzing existing cross correlation between Royal Orchid Hotel and Shangri La Hotel Public, you can compare the effects of market volatilities on Royal Orchid and Shangri La 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 Royal Orchid with a short position of Shangri La. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Orchid and Shangri La.

Diversification Opportunities for Royal Orchid and Shangri La

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Correlation Coefficient

Royal Orchid  Shangri La

Pay attention - limited upside

The 3 months correlation between Royal and Shangri is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Royal Orchid Hotel and Shangri La Hotel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotel and Royal Orchid 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 Royal Orchid Hotel are associated (or correlated) with Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotel has no effect on the direction of Royal Orchid i.e., Royal Orchid and Shangri La go up and down completely randomly.

Pair Corralation between Royal Orchid and Shangri La

Assuming the 90 days trading horizon Royal Orchid Hotel is expected to under-perform the Shangri La. In addition to that, Royal Orchid is 1.64 times more volatile than Shangri La Hotel Public. It trades about -0.14 of its total potential returns per unit of risk. Shangri La Hotel Public is currently generating about 0.09 per unit of volatility. If you would invest  4,404  in Shangri La Hotel Public on April 25, 2025 and sell it today you would earn a total of  496.00  from holding Shangri La Hotel Public or generate 11.26% return on investment over 90 days.

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

Royal Orchid Hotel  vs.  Shangri La Hotel Public

Royal Orchid Hotel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royal Orchid Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in August 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Shangri La Hotel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shangri La Hotel Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Shangri La sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Royal Orchid and Shangri La

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

The idea behind Royal Orchid Hotel and Shangri La Hotel Public 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.