Correlation Between General Insurance and Chalet Hotels

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

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

Diversification Opportunities for General Insurance and Chalet Hotels

-0.1

Correlation Coefficient

General Insurance  Chalet Hotels

Good diversification

The 3 months correlation between General and Chalet is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding General Insurance and Chalet Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalet Hotels Limited and General Insurance 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 General Insurance are associated (or correlated) with Chalet Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalet Hotels Limited has no effect on the direction of General Insurance i.e., General Insurance and Chalet Hotels go up and down completely randomly.

Pair Corralation between General Insurance and Chalet Hotels

Assuming the 90 days trading horizon General Insurance is expected to under-perform the Chalet Hotels. But the stock apears to be less risky and, when comparing its historical volatility, General Insurance is 1.2 times less risky than Chalet Hotels. The stock trades about -0.06 of its potential returns per unit of risk. The Chalet Hotels Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  81,075  in Chalet Hotels Limited on May 7, 2025 and sell it today you would earn a total of  8,700  from holding Chalet Hotels Limited or generate 10.73% return on investment over 90 days.

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

General Insurance  vs.  Chalet Hotels Limited

General Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, General Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Chalet Hotels Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chalet Hotels Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Chalet Hotels may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with General Insurance and Chalet Hotels

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

The idea behind General Insurance and Chalet Hotels 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.