Correlation Between HYATT HOTELS and Air Transport

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Can any of the company-specific risk be diversified away by investing in both HYATT HOTELS and Air Transport 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 HYATT HOTELS and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYATT HOTELS A and Air Transport Services, you can compare the effects of market volatilities on HYATT HOTELS and Air Transport 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 HYATT HOTELS with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and Air Transport.

Diversification Opportunities for HYATT HOTELS and Air Transport

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between HYATT and Air is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and HYATT 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 HYATT HOTELS A are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and Air Transport go up and down completely randomly.

Pair Corralation between HYATT HOTELS and Air Transport

Assuming the 90 days trading horizon HYATT HOTELS is expected to generate 9.86 times less return on investment than Air Transport. But when comparing it to its historical volatility, HYATT HOTELS A is 1.78 times less risky than Air Transport. It trades about 0.03 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,590  in Air Transport Services on October 29, 2024 and sell it today you would earn a total of  530.00  from holding Air Transport Services or generate 33.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

HYATT HOTELS A  vs.  Air Transport Services

 Performance 
       Timeline  
HYATT HOTELS A 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HYATT HOTELS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Air Transport Services 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

HYATT HOTELS and Air Transport Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HYATT HOTELS and Air Transport

The main advantage of trading using opposite HYATT HOTELS and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYATT HOTELS position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.
The idea behind HYATT HOTELS A and Air Transport Services 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.
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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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