Correlation Between Great Wall and Ambassador Hotel
Can any of the company-specific risk be diversified away by investing in both Great Wall and Ambassador 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 Great Wall and Ambassador Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Ambassador Hotel, you can compare the effects of market volatilities on Great Wall and Ambassador 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 Great Wall with a short position of Ambassador Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Ambassador Hotel.
Diversification Opportunities for Great Wall and Ambassador Hotel
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Ambassador is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Ambassador Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador Hotel and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Ambassador Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Hotel has no effect on the direction of Great Wall i.e., Great Wall and Ambassador Hotel go up and down completely randomly.
Pair Corralation between Great Wall and Ambassador Hotel
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.24 times more return on investment than Ambassador Hotel. However, Great Wall Enterprise is 4.15 times less risky than Ambassador Hotel. It trades about 0.31 of its potential returns per unit of risk. Ambassador Hotel is currently generating about -0.05 per unit of risk. If you would invest 5,120 in Great Wall Enterprise on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Great Wall Enterprise or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Great Wall Enterprise vs. Ambassador Hotel
Performance |
| Timeline |
| Great Wall Enterprise |
| Ambassador Hotel |
Great Wall and Ambassador Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Ambassador Hotel
The main advantage of trading using opposite Great Wall and Ambassador Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Ambassador 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 Ambassador Hotel will offset losses from the drop in Ambassador Hotel's long position.| Great Wall vs. De Licacy Industrial | Great Wall vs. Wisher Industrial Co | Great Wall vs. Tainan Enterprises Co |
| Ambassador Hotel vs. Chaintech Technology Corp | Ambassador Hotel vs. AVerMedia Technologies | Ambassador Hotel vs. Avision | Ambassador Hotel vs. Clevo Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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