Correlation Between Oceanic Beverages and First Hotel
Can any of the company-specific risk be diversified away by investing in both Oceanic Beverages and First 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 Oceanic Beverages and First Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceanic Beverages Co and First Hotel Co, you can compare the effects of market volatilities on Oceanic Beverages and First 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 Oceanic Beverages with a short position of First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanic Beverages and First Hotel.
Diversification Opportunities for Oceanic Beverages and First Hotel
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oceanic and First is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Beverages Co and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel and Oceanic Beverages 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 Oceanic Beverages Co are associated (or correlated) with First Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hotel has no effect on the direction of Oceanic Beverages i.e., Oceanic Beverages and First Hotel go up and down completely randomly.
Pair Corralation between Oceanic Beverages and First Hotel
Assuming the 90 days trading horizon Oceanic Beverages Co is expected to generate 2.69 times more return on investment than First Hotel. However, Oceanic Beverages is 2.69 times more volatile than First Hotel Co. It trades about 0.03 of its potential returns per unit of risk. First Hotel Co is currently generating about 0.0 per unit of risk. If you would invest 1,200 in Oceanic Beverages Co on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Oceanic Beverages Co or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oceanic Beverages Co vs. First Hotel Co
Performance |
| Timeline |
| Oceanic Beverages |
| First Hotel |
Oceanic Beverages and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceanic Beverages and First Hotel
The main advantage of trading using opposite Oceanic Beverages and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanic Beverages position performs unexpectedly, First 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 First Hotel will offset losses from the drop in First Hotel's long position.| Oceanic Beverages vs. Great Wall Enterprise | Oceanic Beverages vs. Uni President Enterprises Corp | Oceanic Beverages vs. Lien Hwa Industrial |
| First Hotel vs. Yulon Finance Corp | First Hotel vs. Taiwan Secom Co | First Hotel vs. Pou Chen Corp | First Hotel vs. Great Wall Enterprise |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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