Correlation Between First Hotel and MacroWell OMG
Can any of the company-specific risk be diversified away by investing in both First Hotel and MacroWell OMG 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 MacroWell OMG 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 MacroWell OMG Digital, you can compare the effects of market volatilities on First Hotel and MacroWell OMG 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 MacroWell OMG. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and MacroWell OMG.
Diversification Opportunities for First Hotel and MacroWell OMG
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and MacroWell is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and MacroWell OMG Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MacroWell OMG Digital 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 MacroWell OMG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MacroWell OMG Digital has no effect on the direction of First Hotel i.e., First Hotel and MacroWell OMG go up and down completely randomly.
Pair Corralation between First Hotel and MacroWell OMG
Assuming the 90 days trading horizon First Hotel Co is expected to generate 0.29 times more return on investment than MacroWell OMG. However, First Hotel Co is 3.49 times less risky than MacroWell OMG. It trades about -0.23 of its potential returns per unit of risk. MacroWell OMG Digital is currently generating about -0.27 per unit of risk. If you would invest 1,515 in First Hotel Co on September 4, 2024 and sell it today you would lose (45.00) from holding First Hotel Co or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. MacroWell OMG Digital
Performance |
| Timeline |
| First Hotel |
| MacroWell OMG Digital |
First Hotel and MacroWell OMG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and MacroWell OMG
The main advantage of trading using opposite First Hotel and MacroWell OMG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, MacroWell OMG 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 MacroWell OMG will offset losses from the drop in MacroWell OMG's long position.| First Hotel vs. Tainan Spinning Co | First Hotel vs. Chia Her Industrial | First Hotel vs. WiseChip Semiconductor | First Hotel vs. Novatek Microelectronics Corp |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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