Correlation Between IKEJA HOTELS and JAPAUL OIL

Can any of the company-specific risk be diversified away by investing in both IKEJA HOTELS and JAPAUL OIL 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 IKEJA HOTELS and JAPAUL OIL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IKEJA HOTELS PLC and JAPAUL OIL MARITIME, you can compare the effects of market volatilities on IKEJA HOTELS and JAPAUL OIL 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 IKEJA HOTELS with a short position of JAPAUL OIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of IKEJA HOTELS and JAPAUL OIL.

Diversification Opportunities for IKEJA HOTELS and JAPAUL OIL

0.85

Correlation Coefficient

IKEJA HOTELS  JAPAUL OIL

Very poor diversification

The 3 months correlation between IKEJA and JAPAUL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding IKEJA HOTELS PLC and JAPAUL OIL MARITIME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAUL OIL MARITIME and IKEJA 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 IKEJA HOTELS PLC are associated (or correlated) with JAPAUL OIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAUL OIL MARITIME has no effect on the direction of IKEJA HOTELS i.e., IKEJA HOTELS and JAPAUL OIL go up and down completely randomly.

Pair Corralation between IKEJA HOTELS and JAPAUL OIL

Assuming the 90 days trading horizon IKEJA HOTELS PLC is expected to generate 1.01 times more return on investment than JAPAUL OIL. However, IKEJA HOTELS is 1.01 times more volatile than JAPAUL OIL MARITIME. It trades about 0.21 of its potential returns per unit of risk. JAPAUL OIL MARITIME is currently generating about 0.15 per unit of risk. If you would invest  1,230  in IKEJA HOTELS PLC on May 6, 2025 and sell it today you would earn a total of  820.00  from holding IKEJA HOTELS PLC or generate 66.67% return on investment over 90 days.

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

IKEJA HOTELS PLC  vs.  JAPAUL OIL MARITIME

IKEJA HOTELS PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IKEJA HOTELS PLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, IKEJA HOTELS displayed solid returns over the last few months and may actually be approaching a breakup point.

JAPAUL OIL MARITIME

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAUL OIL MARITIME are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, JAPAUL OIL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IKEJA HOTELS and JAPAUL OIL

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

The idea behind IKEJA HOTELS PLC and JAPAUL OIL MARITIME 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.