Correlation Between PPHE HOTEL and Host Hotels
Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and Host 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 Host 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 Host Hotels Resorts, you can compare the effects of market volatilities on PPHE HOTEL and Host 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and Host Hotels.
Diversification Opportunities for PPHE HOTEL and Host Hotels
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PPHE and Host is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and Host Hotels go up and down completely randomly.
Pair Corralation between PPHE HOTEL and Host Hotels
Assuming the 90 days trading horizon PPHE HOTEL is expected to generate 1.04 times less return on investment than Host Hotels. In addition to that, PPHE HOTEL is 1.08 times more volatile than Host Hotels Resorts. It trades about 0.03 of its total potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.04 per unit of volatility. If you would invest 1,398 in Host Hotels Resorts on September 14, 2024 and sell it today you would earn a total of 382.00 from holding Host Hotels Resorts or generate 27.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE HOTEL GROUP vs. Host Hotels Resorts
Performance |
| Timeline |
| PPHE HOTEL GROUP |
| Host Hotels Resorts |
PPHE HOTEL and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE HOTEL and Host Hotels
The main advantage of trading using opposite PPHE HOTEL and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE HOTEL position performs unexpectedly, Host 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 Host Hotels will offset losses from the drop in Host Hotels' long position.The idea behind PPHE HOTEL GROUP and Host Hotels Resorts 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.| Host Hotels vs. MTI WIRELESS EDGE | Host Hotels vs. PICKN PAY STORES | Host Hotels vs. BJs Wholesale Club | Host Hotels vs. Fast Retailing Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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