Correlation Between Spotify Technology and PPHE Hotel

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and PPHE Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and PPHE Hotel Group, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and PPHE Hotel.

Diversification Opportunities for Spotify Technology and PPHE Hotel

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Spotify and PPHE is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA 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 Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and PPHE Hotel go up and down completely randomly.

Pair Corralation between Spotify Technology and PPHE Hotel

Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.35 times more return on investment than PPHE Hotel. However, Spotify Technology is 1.35 times more volatile than PPHE Hotel Group. It trades about 0.17 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about -0.04 per unit of risk. If you would invest  29,965  in Spotify Technology SA on October 26, 2024 and sell it today you would earn a total of  17,510  from holding Spotify Technology SA or generate 58.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.21%
ValuesDaily Returns

Spotify Technology SA  vs.  PPHE Hotel Group

 Performance 
       Timeline  
Spotify Technology 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.
PPHE Hotel Group 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PPHE Hotel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Spotify Technology and PPHE Hotel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spotify Technology and PPHE Hotel

The main advantage of trading using opposite Spotify Technology and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.
The idea behind Spotify Technology SA and PPHE Hotel Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

Other Complementary Tools

Global Correlations
Find global opportunities by holding instruments from different markets
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine