Correlation Between PPHE HOTEL and COVIVIO HOTELS
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and COVIVIO HOTELS 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 COVIVIO HOTELS 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 COVIVIO HOTELS INH, you can compare the effects of market volatilities on PPHE HOTEL and COVIVIO HOTELS 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 COVIVIO HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and COVIVIO HOTELS.
Diversification Opportunities for PPHE HOTEL and COVIVIO HOTELS
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPHE and COVIVIO is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and COVIVIO HOTELS INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVIVIO HOTELS INH 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 COVIVIO HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVIVIO HOTELS INH has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and COVIVIO HOTELS go up and down completely randomly.
Pair Corralation between PPHE HOTEL and COVIVIO HOTELS
Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to under-perform the COVIVIO HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, PPHE HOTEL GROUP is 1.05 times less risky than COVIVIO HOTELS. The stock trades about -0.01 of its potential returns per unit of risk. The COVIVIO HOTELS INH is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,449 in COVIVIO HOTELS INH on October 12, 2024 and sell it today you would earn a total of 551.00 from holding COVIVIO HOTELS INH or generate 38.03% 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. COVIVIO HOTELS INH
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| COVIVIO HOTELS INH |
PPHE HOTEL and COVIVIO HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and COVIVIO HOTELS
The main advantage of trading using opposite PPHE HOTEL and COVIVIO HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, COVIVIO HOTELS 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 COVIVIO HOTELS will offset losses from the drop in COVIVIO HOTELS's long position.| PPHE HOTEL vs. T MOBILE US | PPHE HOTEL vs. Cogent Communications Holdings | PPHE HOTEL vs. MOBILE FACTORY INC | PPHE HOTEL vs. Air Transport Services |
| COVIVIO HOTELS vs. PACIFIC ONLINE | COVIVIO HOTELS vs. Global Ship Lease | COVIVIO HOTELS vs. UNITED RENTALS | COVIVIO HOTELS vs. Quaker Chemical |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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