Correlation Between Hotel Holiday and Century Wind
Can any of the company-specific risk be diversified away by investing in both Hotel Holiday and Century Wind 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 Hotel Holiday and Century Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Holiday Garden and Century Wind Power, you can compare the effects of market volatilities on Hotel Holiday and Century Wind 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 Hotel Holiday with a short position of Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and Century Wind.
Diversification Opportunities for Hotel Holiday and Century Wind
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hotel and Century is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power and Hotel Holiday 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 Hotel Holiday Garden are associated (or correlated) with Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of Hotel Holiday i.e., Hotel Holiday and Century Wind go up and down completely randomly.
Pair Corralation between Hotel Holiday and Century Wind
Assuming the 90 days trading horizon Hotel Holiday Garden is expected to generate 0.6 times more return on investment than Century Wind. However, Hotel Holiday Garden is 1.66 times less risky than Century Wind. It trades about -0.1 of its potential returns per unit of risk. Century Wind Power is currently generating about -0.22 per unit of risk. If you would invest 1,775 in Hotel Holiday Garden on September 2, 2024 and sell it today you would lose (95.00) from holding Hotel Holiday Garden or give up 5.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Holiday Garden vs. Century Wind Power
Performance |
| Timeline |
| Hotel Holiday Garden |
| Century Wind Power |
Hotel Holiday and Century Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Holiday and Century Wind
The main advantage of trading using opposite Hotel Holiday and Century Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Holiday position performs unexpectedly, Century Wind 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 Century Wind will offset losses from the drop in Century Wind's long position.| Hotel Holiday vs. First Hotel Co | Hotel Holiday vs. Leofoo Development Co | Hotel Holiday vs. Taiwan Tea Corp | Hotel Holiday vs. China Container Terminal |
| Century Wind vs. Ruentex Development Co | Century Wind vs. United Integrated Services | Century Wind vs. CTCI Corp | Century Wind vs. Continental Holdings Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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