Correlation Between Power Wind and First Hotel
Can any of the company-specific risk be diversified away by investing in both Power Wind 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 Power Wind and First Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Wind Health and First Hotel Co, you can compare the effects of market volatilities on Power Wind 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 Power Wind with a short position of First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Wind and First Hotel.
Diversification Opportunities for Power Wind and First Hotel
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and First is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Power Wind Health and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel and Power Wind 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 Power Wind Health 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 Power Wind i.e., Power Wind and First Hotel go up and down completely randomly.
Pair Corralation between Power Wind and First Hotel
Assuming the 90 days trading horizon Power Wind Health is expected to under-perform the First Hotel. In addition to that, Power Wind is 1.41 times more volatile than First Hotel Co. It trades about -0.14 of its total potential returns per unit of risk. First Hotel Co is currently generating about -0.18 per unit of volatility. If you would invest 1,515 in First Hotel Co on September 3, 2024 and sell it today you would lose (35.00) from holding First Hotel Co or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Wind Health vs. First Hotel Co
Performance |
| Timeline |
| Power Wind Health |
| First Hotel |
Power Wind and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Wind and First Hotel
The main advantage of trading using opposite Power Wind and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Wind 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.| Power Wind vs. Giant Manufacturing Co | Power Wind vs. Merida Industry Co | Power Wind vs. Johnson Health Tech | Power Wind vs. Sports Gear Co |
| First Hotel vs. Tainan Spinning Co | First Hotel vs. Chia Her Industrial | First Hotel vs. WiseChip Semiconductor | First Hotel vs. Novatek Microelectronics Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |