Correlation Between PPHE HOTEL and Five Below
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and Five Below 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 PPHE HOTEL and Five Below into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE HOTEL GROUP and Five Below, you can compare the effects of market volatilities on PPHE HOTEL and Five Below 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 PPHE HOTEL with a short position of Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and Five Below.
Diversification Opportunities for PPHE HOTEL and Five Below
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPHE and Five is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and PPHE 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 PPHE HOTEL GROUP are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and Five Below go up and down completely randomly.
Pair Corralation between PPHE HOTEL and Five Below
Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to generate 0.66 times more return on investment than Five Below. However, PPHE HOTEL GROUP is 1.52 times less risky than Five Below. It trades about 0.02 of its potential returns per unit of risk. Five Below is currently generating about -0.04 per unit of risk. If you would invest 1,384 in PPHE HOTEL GROUP on October 31, 2024 and sell it today you would earn a total of 136.00 from holding PPHE HOTEL GROUP or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE HOTEL GROUP vs. Five Below
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| Five Below |
PPHE HOTEL and Five Below Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and Five Below
The main advantage of trading using opposite PPHE HOTEL and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, Five Below 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 Five Below will offset losses from the drop in Five Below's long position.| PPHE HOTEL vs. SOGECLAIR SA INH | PPHE HOTEL vs. RYANAIR HLDGS ADR | PPHE HOTEL vs. Virtu Financial | PPHE HOTEL vs. PRECISION DRILLING P |
| Five Below vs. GRUPO CARSO A1 | Five Below vs. Geely Automobile Holdings | Five Below vs. Micron Technology | Five Below vs. Commercial Vehicle Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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