Correlation Between La Kaffa and HOYA Resort
Can any of the company-specific risk be diversified away by investing in both La Kaffa and HOYA Resort 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 La Kaffa and HOYA Resort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between La Kaffa International and HOYA Resort Hotel, you can compare the effects of market volatilities on La Kaffa and HOYA Resort 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 La Kaffa with a short position of HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Kaffa and HOYA Resort.
Diversification Opportunities for La Kaffa and HOYA Resort
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 2732 and HOYA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding La Kaffa International and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel and La Kaffa 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 La Kaffa International are associated (or correlated) with HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of La Kaffa i.e., La Kaffa and HOYA Resort go up and down completely randomly.
Pair Corralation between La Kaffa and HOYA Resort
Assuming the 90 days trading horizon La Kaffa is expected to generate 2.87 times less return on investment than HOYA Resort. But when comparing it to its historical volatility, La Kaffa International is 1.35 times less risky than HOYA Resort. It trades about 0.0 of its potential returns per unit of risk. HOYA Resort Hotel is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,115 in HOYA Resort Hotel on September 12, 2024 and sell it today you would lose (235.00) from holding HOYA Resort Hotel or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
La Kaffa International vs. HOYA Resort Hotel
Performance |
| Timeline |
| La Kaffa International |
| HOYA Resort Hotel |
La Kaffa and HOYA Resort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Kaffa and HOYA Resort
The main advantage of trading using opposite La Kaffa and HOYA Resort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Kaffa position performs unexpectedly, HOYA Resort 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 HOYA Resort will offset losses from the drop in HOYA Resort's long position.| La Kaffa vs. HOYA Resort Hotel | La Kaffa vs. Chicony Power Technology | La Kaffa vs. United Radiant Technology | La Kaffa vs. Ambassador Hotel |
| HOYA Resort vs. Formosa International Hotels | HOYA Resort vs. Ambassador Hotel | HOYA Resort vs. FDC International Hotels | HOYA Resort vs. First Hotel Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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