Correlation Between Accor SA and Shangri-La Asia
Can any of the company-specific risk be diversified away by investing in both Accor SA and Shangri-La Asia 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 Accor SA and Shangri-La Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accor SA and Shangri La Asia Limited, you can compare the effects of market volatilities on Accor SA and Shangri-La Asia 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 Accor SA with a short position of Shangri-La Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accor SA and Shangri-La Asia.
Diversification Opportunities for Accor SA and Shangri-La Asia
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Accor and Shangri-La is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Accor SA and Shangri La Asia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Asia and Accor SA 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 Accor SA are associated (or correlated) with Shangri-La Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Asia has no effect on the direction of Accor SA i.e., Accor SA and Shangri-La Asia go up and down completely randomly.
Pair Corralation between Accor SA and Shangri-La Asia
Assuming the 90 days horizon Accor SA is expected to generate 1.04 times more return on investment than Shangri-La Asia. However, Accor SA is 1.04 times more volatile than Shangri La Asia Limited. It trades about 0.07 of its potential returns per unit of risk. Shangri La Asia Limited is currently generating about 0.01 per unit of risk. If you would invest 2,565 in Accor SA on September 3, 2024 and sell it today you would earn a total of 1,828 from holding Accor SA or generate 71.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.59% |
| Values | Daily Returns |
Accor SA vs. Shangri La Asia Limited
Performance |
| Timeline |
| Accor SA |
| Shangri La Asia |
Accor SA and Shangri-La Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accor SA and Shangri-La Asia
The main advantage of trading using opposite Accor SA and Shangri-La Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accor SA position performs unexpectedly, Shangri-La Asia 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 Shangri-La Asia will offset losses from the drop in Shangri-La Asia's long position.| Accor SA vs. Hilton Worldwide Holdings | Accor SA vs. InterContinental Hotels Group | Accor SA vs. Marriott International | Accor SA vs. Choice Hotels International |
| Shangri-La Asia vs. Hilton Worldwide Holdings | Shangri-La Asia vs. Hyatt Hotels | Shangri-La Asia vs. Wyndham Hotels Resorts | Shangri-La Asia vs. Choice Hotels International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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