Correlation Between First Hotel and Camellia Metal
Can any of the company-specific risk be diversified away by investing in both First Hotel and Camellia Metal 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 First Hotel and Camellia Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hotel Co and Camellia Metal Co, you can compare the effects of market volatilities on First Hotel and Camellia Metal 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 First Hotel with a short position of Camellia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Camellia Metal.
Diversification Opportunities for First Hotel and Camellia Metal
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Camellia is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and Camellia Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camellia Metal and First 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 First Hotel Co are associated (or correlated) with Camellia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camellia Metal has no effect on the direction of First Hotel i.e., First Hotel and Camellia Metal go up and down completely randomly.
Pair Corralation between First Hotel and Camellia Metal
Assuming the 90 days trading horizon First Hotel is expected to generate 5.98 times less return on investment than Camellia Metal. But when comparing it to its historical volatility, First Hotel Co is 3.15 times less risky than Camellia Metal. It trades about 0.06 of its potential returns per unit of risk. Camellia Metal Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,495 in Camellia Metal Co on November 28, 2024 and sell it today you would earn a total of 30.00 from holding Camellia Metal Co or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. Camellia Metal Co
Performance |
| Timeline |
| First Hotel |
| Camellia Metal |
First Hotel and Camellia Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and Camellia Metal
The main advantage of trading using opposite First Hotel and Camellia Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, Camellia Metal 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 Camellia Metal will offset losses from the drop in Camellia Metal's long position.| First Hotel vs. Leofoo Development Co | First Hotel vs. Hotel Holiday Garden | First Hotel vs. Shin Shin Co | First Hotel vs. Hung Sheng Construction |
| Camellia Metal vs. China Metal Products | Camellia Metal vs. Hwa Fong Rubber | Camellia Metal vs. Farglory FTZ Investment | Camellia Metal vs. Kenda Rubber Industrial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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