Correlation Between Hotel Holiday and TWOWAY Communications
Can any of the company-specific risk be diversified away by investing in both Hotel Holiday and TWOWAY Communications 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 TWOWAY Communications 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 TWOWAY Communications, you can compare the effects of market volatilities on Hotel Holiday and TWOWAY Communications 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 TWOWAY Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and TWOWAY Communications.
Diversification Opportunities for Hotel Holiday and TWOWAY Communications
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hotel and TWOWAY is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden and TWOWAY Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TWOWAY Communications 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 TWOWAY Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TWOWAY Communications has no effect on the direction of Hotel Holiday i.e., Hotel Holiday and TWOWAY Communications go up and down completely randomly.
Pair Corralation between Hotel Holiday and TWOWAY Communications
Assuming the 90 days trading horizon Hotel Holiday Garden is expected to under-perform the TWOWAY Communications. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Holiday Garden is 2.45 times less risky than TWOWAY Communications. The stock trades about -0.04 of its potential returns per unit of risk. The TWOWAY Communications is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,120 in TWOWAY Communications on October 16, 2024 and sell it today you would earn a total of 10,380 from holding TWOWAY Communications or generate 926.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Holiday Garden vs. TWOWAY Communications
Performance |
| Timeline |
| Hotel Holiday Garden |
| TWOWAY Communications |
Hotel Holiday and TWOWAY Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Holiday and TWOWAY Communications
The main advantage of trading using opposite Hotel Holiday and TWOWAY Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Holiday position performs unexpectedly, TWOWAY Communications 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 TWOWAY Communications will offset losses from the drop in TWOWAY Communications' 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 |
| TWOWAY Communications vs. Hotel Holiday Garden | TWOWAY Communications vs. CKM Building Material | TWOWAY Communications vs. Ambassador Hotel | TWOWAY Communications vs. Hwa Fong Rubber |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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