Correlation Between Ambassador Hotel and StShine Optical
Can any of the company-specific risk be diversified away by investing in both Ambassador Hotel and StShine Optical 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 Ambassador Hotel and StShine Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambassador Hotel and StShine Optical Co, you can compare the effects of market volatilities on Ambassador Hotel and StShine Optical 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 Ambassador Hotel with a short position of StShine Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambassador Hotel and StShine Optical.
Diversification Opportunities for Ambassador Hotel and StShine Optical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ambassador and StShine is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ambassador Hotel and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical and Ambassador Hotel 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 Ambassador Hotel are associated (or correlated) with StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of Ambassador Hotel i.e., Ambassador Hotel and StShine Optical go up and down completely randomly.
Pair Corralation between Ambassador Hotel and StShine Optical
Assuming the 90 days trading horizon Ambassador Hotel is expected to generate 0.97 times more return on investment than StShine Optical. However, Ambassador Hotel is 1.03 times less risky than StShine Optical. It trades about 0.42 of its potential returns per unit of risk. StShine Optical Co is currently generating about 0.07 per unit of risk. If you would invest 5,250 in Ambassador Hotel on November 28, 2024 and sell it today you would earn a total of 380.00 from holding Ambassador Hotel or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambassador Hotel vs. StShine Optical Co
Performance |
| Timeline |
| Ambassador Hotel |
| StShine Optical |
Ambassador Hotel and StShine Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambassador Hotel and StShine Optical
The main advantage of trading using opposite Ambassador Hotel and StShine Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambassador Hotel position performs unexpectedly, StShine Optical 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 StShine Optical will offset losses from the drop in StShine Optical's long position.| Ambassador Hotel vs. Formosa International Hotels | Ambassador Hotel vs. Far Eastern Department | Ambassador Hotel vs. Leofoo Development Co | Ambassador Hotel vs. U Ming Marine Transport |
| StShine Optical vs. Holiday Entertainment Co | StShine Optical vs. C Media Electronics | StShine Optical vs. Sports Gear Co | StShine Optical vs. Weltrend Semiconductor |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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