Correlation Between Aristocrat Leisure and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and PPHE 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 Aristocrat Leisure and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and PPHE HOTEL GROUP, you can compare the effects of market volatilities on Aristocrat Leisure and PPHE 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 Aristocrat Leisure with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and PPHE HOTEL.
Diversification Opportunities for Aristocrat Leisure and PPHE HOTEL
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aristocrat and PPHE is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and PPHE HOTEL go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and PPHE HOTEL
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 0.78 times more return on investment than PPHE HOTEL. However, Aristocrat Leisure Limited is 1.29 times less risky than PPHE HOTEL. It trades about 0.2 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about -0.19 per unit of risk. If you would invest 4,200 in Aristocrat Leisure Limited on November 6, 2024 and sell it today you would earn a total of 300.00 from holding Aristocrat Leisure Limited or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| Aristocrat Leisure |
| PPHE HOTEL GROUP |
Aristocrat Leisure and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and PPHE HOTEL
The main advantage of trading using opposite Aristocrat Leisure and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, PPHE 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.| Aristocrat Leisure vs. BJs Wholesale Club | Aristocrat Leisure vs. Ross Stores | Aristocrat Leisure vs. Caseys General Stores | Aristocrat Leisure vs. H2O Retailing |
| PPHE HOTEL vs. ATRESMEDIA | PPHE HOTEL vs. GigaMedia | PPHE HOTEL vs. ANTA SPORTS PRODUCT | PPHE HOTEL vs. Universal Entertainment |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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