Correlation Between PPHE HOTEL and Brown Brown
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and Brown Brown 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 Brown Brown 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 Brown Brown, you can compare the effects of market volatilities on PPHE HOTEL and Brown Brown 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 Brown Brown. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and Brown Brown.
Diversification Opportunities for PPHE HOTEL and Brown Brown
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PPHE and Brown is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and Brown Brown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Brown 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 Brown Brown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Brown has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and Brown Brown go up and down completely randomly.
Pair Corralation between PPHE HOTEL and Brown Brown
Assuming the 90 days trading horizon PPHE HOTEL is expected to generate 4.51 times less return on investment than Brown Brown. In addition to that, PPHE HOTEL is 1.37 times more volatile than Brown Brown. It trades about 0.02 of its total potential returns per unit of risk. Brown Brown is currently generating about 0.11 per unit of volatility. If you would invest 5,334 in Brown Brown on October 27, 2024 and sell it today you would earn a total of 4,706 from holding Brown Brown or generate 88.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE HOTEL GROUP vs. Brown Brown
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| Brown Brown |
PPHE HOTEL and Brown Brown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and Brown Brown
The main advantage of trading using opposite PPHE HOTEL and Brown Brown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, Brown Brown 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 Brown Brown will offset losses from the drop in Brown Brown's long position.| PPHE HOTEL vs. Sunny Optical Technology | PPHE HOTEL vs. DICKS Sporting Goods | PPHE HOTEL vs. BioNTech SE | PPHE HOTEL vs. SCIENCE IN SPORT |
| Brown Brown vs. CARSALESCOM | Brown Brown vs. Discover Financial Services | Brown Brown vs. CHIBA BANK | Brown Brown vs. Cars Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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