Correlation Between Hotel Holiday and First Hotel
Can any of the company-specific risk be diversified away by investing in both Hotel Holiday 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 Hotel Holiday and First Hotel 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 First Hotel Co, you can compare the effects of market volatilities on Hotel Holiday 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 Hotel Holiday with a short position of First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and First Hotel.
Diversification Opportunities for Hotel Holiday and First Hotel
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hotel and First is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel 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 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 Hotel Holiday i.e., Hotel Holiday and First Hotel go up and down completely randomly.
Pair Corralation between Hotel Holiday and First Hotel
Assuming the 90 days trading horizon Hotel Holiday Garden is expected to under-perform the First Hotel. In addition to that, Hotel Holiday is 1.36 times more volatile than First Hotel Co. It trades about -0.08 of its total potential returns per unit of risk. First Hotel Co is currently generating about -0.06 per unit of volatility. If you would invest 1,935 in First Hotel Co on August 31, 2024 and sell it today you would lose (460.00) from holding First Hotel Co or give up 23.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Holiday Garden vs. First Hotel Co
Performance |
| Timeline |
| Hotel Holiday Garden |
| First Hotel |
Hotel Holiday and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Holiday and First Hotel
The main advantage of trading using opposite Hotel Holiday and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Holiday 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.| Hotel Holiday vs. First Hotel Co | Hotel Holiday vs. Leofoo Development Co | Hotel Holiday vs. Taiwan Tea Corp | Hotel Holiday vs. China Container Terminal |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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