Correlation Between HOYA Resort and CHC Healthcare
Can any of the company-specific risk be diversified away by investing in both HOYA Resort and CHC Healthcare 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 HOYA Resort and CHC Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOYA Resort Hotel and CHC Healthcare Group, you can compare the effects of market volatilities on HOYA Resort and CHC Healthcare 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 HOYA Resort with a short position of CHC Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOYA Resort and CHC Healthcare.
Diversification Opportunities for HOYA Resort and CHC Healthcare
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HOYA and CHC is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding HOYA Resort Hotel and CHC Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Healthcare Group and HOYA Resort 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 HOYA Resort Hotel are associated (or correlated) with CHC Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Healthcare Group has no effect on the direction of HOYA Resort i.e., HOYA Resort and CHC Healthcare go up and down completely randomly.
Pair Corralation between HOYA Resort and CHC Healthcare
Assuming the 90 days trading horizon HOYA Resort Hotel is expected to generate 3.6 times more return on investment than CHC Healthcare. However, HOYA Resort is 3.6 times more volatile than CHC Healthcare Group. It trades about 0.08 of its potential returns per unit of risk. CHC Healthcare Group is currently generating about 0.16 per unit of risk. If you would invest 2,120 in HOYA Resort Hotel on November 6, 2024 and sell it today you would earn a total of 85.00 from holding HOYA Resort Hotel or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOYA Resort Hotel vs. CHC Healthcare Group
Performance |
| Timeline |
| HOYA Resort Hotel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| CHC Healthcare Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
HOYA Resort and CHC Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOYA Resort and CHC Healthcare
The main advantage of trading using opposite HOYA Resort and CHC Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOYA Resort position performs unexpectedly, CHC Healthcare 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 CHC Healthcare will offset losses from the drop in CHC Healthcare's long position.The idea behind HOYA Resort Hotel and CHC Healthcare Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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