Correlation Between Hotel Holiday and Trade Van
Can any of the company-specific risk be diversified away by investing in both Hotel Holiday and Trade Van 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 Trade Van 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 Trade Van Information Services, you can compare the effects of market volatilities on Hotel Holiday and Trade Van 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 Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and Trade Van.
Diversification Opportunities for Hotel Holiday and Trade Van
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hotel and Trade is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Hotel Holiday i.e., Hotel Holiday and Trade Van go up and down completely randomly.
Pair Corralation between Hotel Holiday and Trade Van
Assuming the 90 days trading horizon Hotel Holiday Garden is expected to under-perform the Trade Van. In addition to that, Hotel Holiday is 1.97 times more volatile than Trade Van Information Services. It trades about -0.07 of its total potential returns per unit of risk. Trade Van Information Services is currently generating about 0.09 per unit of volatility. If you would invest 6,420 in Trade Van Information Services on September 2, 2024 and sell it today you would earn a total of 1,670 from holding Trade Van Information Services or generate 26.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Holiday Garden vs. Trade Van Information Services
Performance |
| Timeline |
| Hotel Holiday Garden |
| Trade Van Information |
Hotel Holiday and Trade Van Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Holiday and Trade Van
The main advantage of trading using opposite Hotel Holiday and Trade Van positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Holiday position performs unexpectedly, Trade Van 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 Trade Van will offset losses from the drop in Trade Van'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 |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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