Correlation Between Camellia Metal and First Hotel
Can any of the company-specific risk be diversified away by investing in both Camellia Metal 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 Camellia Metal and First Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Camellia Metal Co and First Hotel Co, you can compare the effects of market volatilities on Camellia Metal 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 Camellia Metal with a short position of First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camellia Metal and First Hotel.
Diversification Opportunities for Camellia Metal and First Hotel
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Camellia and First is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Camellia Metal 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 Camellia Metal 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 Camellia Metal 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 Camellia Metal i.e., Camellia Metal and First Hotel go up and down completely randomly.
Pair Corralation between Camellia Metal and First Hotel
Assuming the 90 days trading horizon Camellia Metal Co is expected to generate 1.4 times more return on investment than First Hotel. However, Camellia Metal is 1.4 times more volatile than First Hotel Co. It trades about -0.02 of its potential returns per unit of risk. First Hotel Co is currently generating about -0.04 per unit of risk. If you would invest 1,690 in Camellia Metal Co on September 2, 2024 and sell it today you would lose (205.00) from holding Camellia Metal Co or give up 12.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Camellia Metal Co vs. First Hotel Co
Performance |
| Timeline |
| Camellia Metal |
| First Hotel |
Camellia Metal and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Camellia Metal and First Hotel
The main advantage of trading using opposite Camellia Metal and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Camellia Metal 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.| Camellia Metal vs. Yang Ming Marine | Camellia Metal vs. Wan Hai Lines | Camellia Metal vs. Hsin Kuang Steel | Camellia Metal vs. Evergreen Marine Corp |
| First Hotel vs. Leofoo Development Co | First Hotel vs. Hotel Holiday Garden | First Hotel vs. Shin Shin Co | First Hotel vs. Hung Sheng Construction |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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