Correlation Between First Hotel and Provision Information
Can any of the company-specific risk be diversified away by investing in both First Hotel and Provision Information 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 Provision Information 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 Provision Information CoLtd, you can compare the effects of market volatilities on First Hotel and Provision Information 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 Provision Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Provision Information.
Diversification Opportunities for First Hotel and Provision Information
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Provision is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and Provision Information CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provision Information 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 Provision Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provision Information has no effect on the direction of First Hotel i.e., First Hotel and Provision Information go up and down completely randomly.
Pair Corralation between First Hotel and Provision Information
Assuming the 90 days trading horizon First Hotel is expected to generate 8.58 times less return on investment than Provision Information. But when comparing it to its historical volatility, First Hotel Co is 1.78 times less risky than Provision Information. It trades about 0.01 of its potential returns per unit of risk. Provision Information CoLtd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,281 in Provision Information CoLtd on October 14, 2024 and sell it today you would earn a total of 2,339 from holding Provision Information CoLtd or generate 44.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. Provision Information CoLtd
Performance |
| Timeline |
| First Hotel |
| Provision Information |
First Hotel and Provision Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and Provision Information
The main advantage of trading using opposite First Hotel and Provision Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, Provision Information 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 Provision Information will offset losses from the drop in Provision Information'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 |
| Provision Information vs. First Hotel Co | Provision Information vs. Oceanic Beverages Co | Provision Information vs. Highwealth Construction Corp | Provision Information vs. ReaLy Development Construction |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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