Correlation Between First Hotel and Pontex Polyblend
Can any of the company-specific risk be diversified away by investing in both First Hotel and Pontex Polyblend 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 Pontex Polyblend 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 Pontex Polyblend CoLtd, you can compare the effects of market volatilities on First Hotel and Pontex Polyblend 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 Pontex Polyblend. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Pontex Polyblend.
Diversification Opportunities for First Hotel and Pontex Polyblend
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Pontex is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and Pontex Polyblend CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontex Polyblend CoLtd 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 Pontex Polyblend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontex Polyblend CoLtd has no effect on the direction of First Hotel i.e., First Hotel and Pontex Polyblend go up and down completely randomly.
Pair Corralation between First Hotel and Pontex Polyblend
Assuming the 90 days trading horizon First Hotel is expected to generate 1.75 times less return on investment than Pontex Polyblend. But when comparing it to its historical volatility, First Hotel Co is 1.54 times less risky than Pontex Polyblend. It trades about 0.16 of its potential returns per unit of risk. Pontex Polyblend CoLtd is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,210 in Pontex Polyblend CoLtd on November 5, 2024 and sell it today you would earn a total of 80.00 from holding Pontex Polyblend CoLtd or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. Pontex Polyblend CoLtd
Performance |
| Timeline |
| First Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pontex Polyblend CoLtd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
First Hotel and Pontex Polyblend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and Pontex Polyblend
The main advantage of trading using opposite First Hotel and Pontex Polyblend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, Pontex Polyblend 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 Pontex Polyblend will offset losses from the drop in Pontex Polyblend's long position.The idea behind First Hotel Co and Pontex Polyblend CoLtd 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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