Correlation Between Les Hotels and Reworld Media
Can any of the company-specific risk be diversified away by investing in both Les Hotels and Reworld Media 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 Les Hotels and Reworld Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Les Hotels Bav and Reworld Media, you can compare the effects of market volatilities on Les Hotels and Reworld Media 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 Les Hotels with a short position of Reworld Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and Reworld Media.
Diversification Opportunities for Les Hotels and Reworld Media
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Les and Reworld is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and Reworld Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reworld Media and Les Hotels 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 Les Hotels Bav are associated (or correlated) with Reworld Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reworld Media has no effect on the direction of Les Hotels i.e., Les Hotels and Reworld Media go up and down completely randomly.
Pair Corralation between Les Hotels and Reworld Media
Assuming the 90 days trading horizon Les Hotels Bav is expected to generate 0.2 times more return on investment than Reworld Media. However, Les Hotels Bav is 4.98 times less risky than Reworld Media. It trades about -0.05 of its potential returns per unit of risk. Reworld Media is currently generating about -0.44 per unit of risk. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Les Hotels Bav vs. Reworld Media
Performance |
| Timeline |
| Les Hotels Bav |
| Reworld Media |
Les Hotels and Reworld Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Hotels and Reworld Media
The main advantage of trading using opposite Les Hotels and Reworld Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Hotels position performs unexpectedly, Reworld Media 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 Reworld Media will offset losses from the drop in Reworld Media's long position.| Les Hotels vs. SA Catana Group | Les Hotels vs. Reworld Media | Les Hotels vs. Biosynex | Les Hotels vs. Moulinvest |
| Reworld Media vs. Vallourec | Reworld Media vs. Genfit | Reworld Media vs. Innate Pharma | Reworld Media vs. Etablissements Maurel et |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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