Correlation Between Host Hotels and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Aeorema Communications 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 Host Hotels and Aeorema Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and Aeorema Communications Plc, you can compare the effects of market volatilities on Host Hotels and Aeorema Communications 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 Host Hotels with a short position of Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Aeorema Communications.
Diversification Opportunities for Host Hotels and Aeorema Communications
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Host and Aeorema is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications and Host 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 Host Hotels Resorts are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of Host Hotels i.e., Host Hotels and Aeorema Communications go up and down completely randomly.
Pair Corralation between Host Hotels and Aeorema Communications
Assuming the 90 days trading horizon Host Hotels Resorts is expected to generate 0.77 times more return on investment than Aeorema Communications. However, Host Hotels Resorts is 1.3 times less risky than Aeorema Communications. It trades about 0.02 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about -0.01 per unit of risk. If you would invest 1,636 in Host Hotels Resorts on August 30, 2024 and sell it today you would earn a total of 214.00 from holding Host Hotels Resorts or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.98% |
| Values | Daily Returns |
Host Hotels Resorts vs. Aeorema Communications Plc
Performance |
| Timeline |
| Host Hotels Resorts |
| Aeorema Communications |
Host Hotels and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Aeorema Communications
The main advantage of trading using opposite Host Hotels and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| Host Hotels vs. Lendinvest PLC | Host Hotels vs. Neometals | Host Hotels vs. Albion Technology General | Host Hotels vs. Jupiter Fund Management |
| Aeorema Communications vs. Walmart | Aeorema Communications vs. BYD Co | Aeorema Communications vs. Volkswagen AG | Aeorema Communications vs. Volkswagen AG Non Vtg |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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