Correlation Between Ambassador Hotel and Ma Kuang
Can any of the company-specific risk be diversified away by investing in both Ambassador Hotel and Ma Kuang 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 Ma Kuang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambassador Hotel and Ma Kuang Healthcare, you can compare the effects of market volatilities on Ambassador Hotel and Ma Kuang 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 Ma Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambassador Hotel and Ma Kuang.
Diversification Opportunities for Ambassador Hotel and Ma Kuang
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ambassador and 4139 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ambassador Hotel and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare 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 Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of Ambassador Hotel i.e., Ambassador Hotel and Ma Kuang go up and down completely randomly.
Pair Corralation between Ambassador Hotel and Ma Kuang
Assuming the 90 days trading horizon Ambassador Hotel is expected to under-perform the Ma Kuang. But the stock apears to be less risky and, when comparing its historical volatility, Ambassador Hotel is 1.19 times less risky than Ma Kuang. The stock trades about -0.11 of its potential returns per unit of risk. The Ma Kuang Healthcare is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,000 in Ma Kuang Healthcare on October 20, 2024 and sell it today you would earn a total of 25.00 from holding Ma Kuang Healthcare or generate 0.83% 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. Ma Kuang Healthcare
Performance |
| Timeline |
| Ambassador Hotel |
| Ma Kuang Healthcare |
Ambassador Hotel and Ma Kuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambassador Hotel and Ma Kuang
The main advantage of trading using opposite Ambassador Hotel and Ma Kuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambassador Hotel position performs unexpectedly, Ma Kuang 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 Ma Kuang will offset losses from the drop in Ma Kuang'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 |
| Ma Kuang vs. Transcend Information | Ma Kuang vs. Mitake Information | Ma Kuang vs. Shinkong Insurance Co | Ma Kuang vs. Information Technology Total |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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