Correlation Between Albion Technology and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Albion Technology 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 Albion Technology and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albion Technology General and Host Hotels Resorts, you can compare the effects of market volatilities on Albion Technology 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 Albion Technology with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albion Technology and Host Hotels.
Diversification Opportunities for Albion Technology and Host Hotels
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Albion and Host is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Albion Technology General 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 Albion Technology 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 Albion Technology General 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 Albion Technology i.e., Albion Technology and Host Hotels go up and down completely randomly.
Pair Corralation between Albion Technology and Host Hotels
Assuming the 90 days trading horizon Albion Technology General is expected to under-perform the Host Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Albion Technology General is 1.04 times less risky than Host Hotels. The stock trades about -0.05 of its potential returns per unit of risk. The Host Hotels Resorts is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,741 in Host Hotels Resorts on September 1, 2024 and sell it today you would earn a total of 111.00 from holding Host Hotels Resorts or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albion Technology General vs. Host Hotels Resorts
Performance |
| Timeline |
| Albion Technology General |
| Host Hotels Resorts |
Albion Technology and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albion Technology and Host Hotels
The main advantage of trading using opposite Albion Technology and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albion Technology 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.| Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Toyota Motor Corp | Albion Technology vs. Reliance Industries Ltd |
| Host Hotels vs. Greenroc Mining PLC | Host Hotels vs. Panther Metals PLC | Host Hotels vs. X FAB Silicon Foundries | Host Hotels vs. Endeavour Mining 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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