Correlation Between Ambassador Hotel and Leofoo Development
Can any of the company-specific risk be diversified away by investing in both Ambassador Hotel and Leofoo Development 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 Leofoo Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambassador Hotel and Leofoo Development Co, you can compare the effects of market volatilities on Ambassador Hotel and Leofoo Development 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 Leofoo Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambassador Hotel and Leofoo Development.
Diversification Opportunities for Ambassador Hotel and Leofoo Development
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ambassador and Leofoo is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ambassador Hotel and Leofoo Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leofoo Development 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 Leofoo Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leofoo Development has no effect on the direction of Ambassador Hotel i.e., Ambassador Hotel and Leofoo Development go up and down completely randomly.
Pair Corralation between Ambassador Hotel and Leofoo Development
Assuming the 90 days trading horizon Ambassador Hotel is expected to under-perform the Leofoo Development. But the stock apears to be less risky and, when comparing its historical volatility, Ambassador Hotel is 1.53 times less risky than Leofoo Development. The stock trades about -0.21 of its potential returns per unit of risk. The Leofoo Development Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,760 in Leofoo Development Co on November 5, 2024 and sell it today you would earn a total of 90.00 from holding Leofoo Development Co or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambassador Hotel vs. Leofoo Development Co
Performance |
| Timeline |
| Ambassador Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Leofoo Development |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Ambassador Hotel and Leofoo Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambassador Hotel and Leofoo Development
The main advantage of trading using opposite Ambassador Hotel and Leofoo Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambassador Hotel position performs unexpectedly, Leofoo Development 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 Leofoo Development will offset losses from the drop in Leofoo Development's long position.The idea behind Ambassador Hotel and Leofoo Development Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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