Correlation Between Xenia Hotels and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and THRACE PLASTICS 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 Xenia Hotels and THRACE PLASTICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xenia Hotels Resorts and THRACE PLASTICS, you can compare the effects of market volatilities on Xenia Hotels and THRACE PLASTICS 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 Xenia Hotels with a short position of THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and THRACE PLASTICS.
Diversification Opportunities for Xenia Hotels and THRACE PLASTICS
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xenia and THRACE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS and Xenia 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 Xenia Hotels Resorts are associated (or correlated) with THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between Xenia Hotels and THRACE PLASTICS
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 1.43 times more return on investment than THRACE PLASTICS. However, Xenia Hotels is 1.43 times more volatile than THRACE PLASTICS. It trades about 0.02 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.02 per unit of risk. If you would invest 1,312 in Xenia Hotels Resorts on November 21, 2024 and sell it today you would earn a total of 48.00 from holding Xenia Hotels Resorts or generate 3.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Xenia Hotels Resorts vs. THRACE PLASTICS
Performance |
Timeline |
Xenia Hotels Resorts |
THRACE PLASTICS |
Xenia Hotels and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xenia Hotels and THRACE PLASTICS
The main advantage of trading using opposite Xenia Hotels and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.Xenia Hotels vs. MOVIE GAMES SA | ||
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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