Correlation Between Sporton International and First Hotel
Can any of the company-specific risk be diversified away by investing in both Sporton International and First 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 Sporton International and First Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sporton International and First Hotel Co, you can compare the effects of market volatilities on Sporton International and First 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 Sporton International with a short position of First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sporton International and First Hotel.
Diversification Opportunities for Sporton International and First Hotel
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sporton and First is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sporton International and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel and Sporton International 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 Sporton International are associated (or correlated) with First Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hotel has no effect on the direction of Sporton International i.e., Sporton International and First Hotel go up and down completely randomly.
Pair Corralation between Sporton International and First Hotel
Assuming the 90 days trading horizon Sporton International is expected to generate 1.77 times more return on investment than First Hotel. However, Sporton International is 1.77 times more volatile than First Hotel Co. It trades about -0.01 of its potential returns per unit of risk. First Hotel Co is currently generating about -0.04 per unit of risk. If you would invest 22,483 in Sporton International on September 2, 2024 and sell it today you would lose (2,133) from holding Sporton International or give up 9.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sporton International vs. First Hotel Co
Performance |
| Timeline |
| Sporton International |
| First Hotel |
Sporton International and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sporton International and First Hotel
The main advantage of trading using opposite Sporton International and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sporton International position performs unexpectedly, First 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 First Hotel will offset losses from the drop in First Hotel's long position.| Sporton International vs. Hunya Foods Co | Sporton International vs. Microtips Technology | Sporton International vs. Intai Technology | Sporton International vs. Univacco Technology |
| First Hotel vs. Leofoo Development Co | First Hotel vs. Hotel Holiday Garden | First Hotel vs. Shin Shin Co | First Hotel vs. Hung Sheng Construction |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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