Correlation Between Ta Yih and Hotel Holiday
Can any of the company-specific risk be diversified away by investing in both Ta Yih and Hotel Holiday 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 Ta Yih and Hotel Holiday into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Yih Industrial and Hotel Holiday Garden, you can compare the effects of market volatilities on Ta Yih and Hotel Holiday 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 Ta Yih with a short position of Hotel Holiday. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Yih and Hotel Holiday.
Diversification Opportunities for Ta Yih and Hotel Holiday
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 1521 and Hotel is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ta Yih Industrial and Hotel Holiday Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Holiday Garden and Ta Yih 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 Ta Yih Industrial are associated (or correlated) with Hotel Holiday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Holiday Garden has no effect on the direction of Ta Yih i.e., Ta Yih and Hotel Holiday go up and down completely randomly.
Pair Corralation between Ta Yih and Hotel Holiday
Assuming the 90 days trading horizon Ta Yih Industrial is expected to under-perform the Hotel Holiday. But the stock apears to be less risky and, when comparing its historical volatility, Ta Yih Industrial is 1.02 times less risky than Hotel Holiday. The stock trades about -0.36 of its potential returns per unit of risk. The Hotel Holiday Garden is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,630 in Hotel Holiday Garden on November 5, 2024 and sell it today you would earn a total of 80.00 from holding Hotel Holiday Garden or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ta Yih Industrial vs. Hotel Holiday Garden
Performance |
| Timeline |
| Ta Yih Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hotel Holiday Garden |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ta Yih and Hotel Holiday Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Yih and Hotel Holiday
The main advantage of trading using opposite Ta Yih and Hotel Holiday positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Yih position performs unexpectedly, Hotel Holiday 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 Hotel Holiday will offset losses from the drop in Hotel Holiday's long position.The idea behind Ta Yih Industrial and Hotel Holiday Garden 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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