Correlation Between Hotel Holiday and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Hotel Holiday and Chernan Metal 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 Chernan Metal 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 Chernan Metal Industrial, you can compare the effects of market volatilities on Hotel Holiday and Chernan Metal 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 Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and Chernan Metal.
Diversification Opportunities for Hotel Holiday and Chernan Metal
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hotel and Chernan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial 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 Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Hotel Holiday i.e., Hotel Holiday and Chernan Metal go up and down completely randomly.
Pair Corralation between Hotel Holiday and Chernan Metal
Assuming the 90 days trading horizon Hotel Holiday Garden is expected to under-perform the Chernan Metal. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Holiday Garden is 1.54 times less risky than Chernan Metal. The stock trades about -0.07 of its potential returns per unit of risk. The Chernan Metal Industrial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,420 in Chernan Metal Industrial on September 2, 2024 and sell it today you would earn a total of 635.00 from holding Chernan Metal Industrial or generate 18.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Holiday Garden vs. Chernan Metal Industrial
Performance |
| Timeline |
| Hotel Holiday Garden |
| Chernan Metal Industrial |
Hotel Holiday and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Holiday and Chernan Metal
The main advantage of trading using opposite Hotel Holiday and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Holiday position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal'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 |
| Chernan Metal vs. Yang Ming Marine | Chernan Metal vs. Wan Hai Lines | Chernan Metal vs. Hsin Kuang Steel | Chernan Metal vs. Evergreen Marine 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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