Correlation Between Innelec Multimedia and Les Hotels
Can any of the company-specific risk be diversified away by investing in both Innelec Multimedia and Les 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 Innelec Multimedia and Les Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innelec Multimedia and Les Hotels Bav, you can compare the effects of market volatilities on Innelec Multimedia and Les 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 Innelec Multimedia with a short position of Les Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innelec Multimedia and Les Hotels.
Diversification Opportunities for Innelec Multimedia and Les Hotels
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innelec and Les is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Innelec Multimedia and Les Hotels Bav in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Hotels Bav and Innelec Multimedia 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 Innelec Multimedia are associated (or correlated) with Les Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Hotels Bav has no effect on the direction of Innelec Multimedia i.e., Innelec Multimedia and Les Hotels go up and down completely randomly.
Pair Corralation between Innelec Multimedia and Les Hotels
Assuming the 90 days trading horizon Innelec Multimedia is expected to under-perform the Les Hotels. In addition to that, Innelec Multimedia is 2.61 times more volatile than Les Hotels Bav. It trades about -0.05 of its total potential returns per unit of risk. Les Hotels Bav is currently generating about -0.05 per unit of volatility. If you would invest 7,150 in Les Hotels Bav on August 25, 2024 and sell it today you would lose (50.00) from holding Les Hotels Bav or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innelec Multimedia vs. Les Hotels Bav
Performance |
| Timeline |
| Innelec Multimedia |
| Les Hotels Bav |
Innelec Multimedia and Les Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innelec Multimedia and Les Hotels
The main advantage of trading using opposite Innelec Multimedia and Les Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innelec Multimedia position performs unexpectedly, Les 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 Les Hotels will offset losses from the drop in Les Hotels' long position.| Innelec Multimedia vs. Stef SA | Innelec Multimedia vs. Bonduelle SCA | Innelec Multimedia vs. Lisi SA | Innelec Multimedia vs. Interparfums SA |
| Les Hotels vs. SA Catana Group | Les Hotels vs. Reworld Media | Les Hotels vs. Biosynex | Les Hotels vs. Moulinvest |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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