Correlation Between SoftBank Group and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and PPHE Hotel 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 SoftBank Group and PPHE Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and PPHE Hotel Group, you can compare the effects of market volatilities on SoftBank Group and PPHE Hotel 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 SoftBank Group with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and PPHE Hotel.
Diversification Opportunities for SoftBank Group and PPHE Hotel
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SoftBank and PPHE is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group and SoftBank Group 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 SoftBank Group Corp are associated (or correlated) with PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of SoftBank Group i.e., SoftBank Group and PPHE Hotel go up and down completely randomly.
Pair Corralation between SoftBank Group and PPHE Hotel
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 2.37 times more return on investment than PPHE Hotel. However, SoftBank Group is 2.37 times more volatile than PPHE Hotel Group. It trades about 0.04 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about -0.19 per unit of risk. If you would invest 929,927 in SoftBank Group Corp on November 4, 2024 and sell it today you would earn a total of 11,173 from holding SoftBank Group Corp or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
SoftBank Group Corp vs. PPHE Hotel Group
Performance |
| Timeline |
| SoftBank Group Corp |
| PPHE Hotel Group |
SoftBank Group and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and PPHE Hotel
The main advantage of trading using opposite SoftBank Group and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, PPHE Hotel 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| SoftBank Group vs. BE Semiconductor Industries | SoftBank Group vs. Eastman Chemical Co | SoftBank Group vs. Verizon Communications | SoftBank Group vs. Aeorema Communications Plc |
| PPHE Hotel vs. SupplyMe Capital PLC | PPHE Hotel vs. SM Energy Co | PPHE Hotel vs. Grand Vision Media | PPHE Hotel vs. DG Innovate PLC |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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