Correlation Between Ashford Hospitality and Shenzhen Investment
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and Shenzhen Investment 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 Ashford Hospitality and Shenzhen Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashford Hospitality Trust and Shenzhen Investment Holdings, you can compare the effects of market volatilities on Ashford Hospitality and Shenzhen Investment 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 Ashford Hospitality with a short position of Shenzhen Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Shenzhen Investment.
Diversification Opportunities for Ashford Hospitality and Shenzhen Investment
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashford and Shenzhen is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and Shenzhen Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Investment and Ashford Hospitality 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 Ashford Hospitality Trust are associated (or correlated) with Shenzhen Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Investment has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and Shenzhen Investment go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Shenzhen Investment
Considering the 90-day investment horizon Ashford Hospitality Trust is expected to under-perform the Shenzhen Investment. But the stock apears to be less risky and, when comparing its historical volatility, Ashford Hospitality Trust is 1.01 times less risky than Shenzhen Investment. The stock trades about -0.01 of its potential returns per unit of risk. The Shenzhen Investment Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Shenzhen Investment Holdings on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Shenzhen Investment Holdings or generate 83.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Shenzhen Investment Holdings
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Shenzhen Investment |
Ashford Hospitality and Shenzhen Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Shenzhen Investment
The main advantage of trading using opposite Ashford Hospitality and Shenzhen Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality position performs unexpectedly, Shenzhen Investment 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 Shenzhen Investment will offset losses from the drop in Shenzhen Investment's long position.| Ashford Hospitality vs. Sotherly Hotels | Ashford Hospitality vs. Summit Hotel Properties | Ashford Hospitality vs. Diamondrock Hospitality | Ashford Hospitality vs. RLJ Lodging Trust |
| Shenzhen Investment vs. Verra Mobility Corp | Shenzhen Investment vs. HUMANA INC | Shenzhen Investment vs. SCOR PK | Shenzhen Investment vs. Aquagold 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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