Correlation Between Les Enphants and First Hotel
Can any of the company-specific risk be diversified away by investing in both Les Enphants and First Hotel 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 Les Enphants and First Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Les Enphants Co and First Hotel Co, you can compare the effects of market volatilities on Les Enphants and First Hotel 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 Les Enphants with a short position of First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Enphants and First Hotel.
Diversification Opportunities for Les Enphants and First Hotel
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Les and First is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Les Enphants Co and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel and Les Enphants 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 Les Enphants Co are associated (or correlated) with First Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hotel has no effect on the direction of Les Enphants i.e., Les Enphants and First Hotel go up and down completely randomly.
Pair Corralation between Les Enphants and First Hotel
Assuming the 90 days trading horizon Les Enphants Co is expected to under-perform the First Hotel. In addition to that, Les Enphants is 1.67 times more volatile than First Hotel Co. It trades about -0.34 of its total potential returns per unit of risk. First Hotel Co is currently generating about -0.23 per unit of volatility. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Les Enphants Co vs. First Hotel Co
Performance |
| Timeline |
| Les Enphants |
| First Hotel |
Les Enphants and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Enphants and First Hotel
The main advantage of trading using opposite Les Enphants and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Enphants position performs unexpectedly, First Hotel 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 First Hotel will offset losses from the drop in First Hotel's long position.| Les Enphants vs. Far Eastern Department | Les Enphants vs. Shin Shin Co | Les Enphants vs. First Hotel Co | Les Enphants vs. Hung Sheng Construction |
| First Hotel vs. Tainan Spinning Co | First Hotel vs. Chia Her Industrial | First Hotel vs. WiseChip Semiconductor | First Hotel vs. Novatek Microelectronics Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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