Correlation Between Landis Taipei and Ambassador Hotel
Can any of the company-specific risk be diversified away by investing in both Landis Taipei and Ambassador 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 Landis Taipei and Ambassador Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Landis Taipei Hotel and Ambassador Hotel, you can compare the effects of market volatilities on Landis Taipei and Ambassador 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 Landis Taipei with a short position of Ambassador Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Landis Taipei and Ambassador Hotel.
Diversification Opportunities for Landis Taipei and Ambassador Hotel
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Landis and Ambassador is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Landis Taipei Hotel and Ambassador Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador Hotel and Landis Taipei 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 Landis Taipei Hotel are associated (or correlated) with Ambassador Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Hotel has no effect on the direction of Landis Taipei i.e., Landis Taipei and Ambassador Hotel go up and down completely randomly.
Pair Corralation between Landis Taipei and Ambassador Hotel
Assuming the 90 days trading horizon Landis Taipei is expected to generate 4.93 times less return on investment than Ambassador Hotel. In addition to that, Landis Taipei is 1.44 times more volatile than Ambassador Hotel. It trades about 0.01 of its total potential returns per unit of risk. Ambassador Hotel is currently generating about 0.07 per unit of volatility. If you would invest 3,255 in Ambassador Hotel on September 1, 2024 and sell it today you would earn a total of 2,395 from holding Ambassador Hotel or generate 73.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Landis Taipei Hotel vs. Ambassador Hotel
Performance |
| Timeline |
| Landis Taipei Hotel |
| Ambassador Hotel |
Landis Taipei and Ambassador Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Landis Taipei and Ambassador Hotel
The main advantage of trading using opposite Landis Taipei and Ambassador Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Landis Taipei position performs unexpectedly, Ambassador 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 Ambassador Hotel will offset losses from the drop in Ambassador Hotel's long position.| Landis Taipei vs. Formosa International Hotels | Landis Taipei vs. Ambassador Hotel | Landis Taipei vs. FDC International Hotels | Landis Taipei vs. First Hotel Co |
| Ambassador Hotel vs. Chaintech Technology Corp | Ambassador Hotel vs. AVerMedia Technologies | Ambassador Hotel vs. Avision | Ambassador Hotel vs. Clevo 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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