Correlation Between Les Hotels and VEOM Group
Can any of the company-specific risk be diversified away by investing in both Les Hotels and VEOM Group 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 VEOM Group 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 VEOM Group SA, you can compare the effects of market volatilities on Les Hotels and VEOM Group 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 VEOM Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and VEOM Group.
Diversification Opportunities for Les Hotels and VEOM Group
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Les and VEOM is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and VEOM Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VEOM Group SA 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 VEOM Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VEOM Group SA has no effect on the direction of Les Hotels i.e., Les Hotels and VEOM Group go up and down completely randomly.
Pair Corralation between Les Hotels and VEOM Group
Assuming the 90 days trading horizon Les Hotels is expected to generate 2.68 times less return on investment than VEOM Group. But when comparing it to its historical volatility, Les Hotels Bav is 2.96 times less risky than VEOM Group. It trades about 0.05 of its potential returns per unit of risk. VEOM Group SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13.00 in VEOM Group SA on November 4, 2024 and sell it today you would earn a total of 0.00 from holding VEOM Group SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Les Hotels Bav vs. VEOM Group SA
Performance |
| Timeline |
| Les Hotels Bav |
| VEOM Group SA |
Les Hotels and VEOM Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Hotels and VEOM Group
The main advantage of trading using opposite Les Hotels and VEOM Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Hotels position performs unexpectedly, VEOM Group 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 VEOM Group will offset losses from the drop in VEOM Group's long position.| Les Hotels vs. Les Htels de | Les Hotels vs. Moulinvest | Les Hotels vs. Bernard Loisea | Les Hotels vs. Groupimo SA |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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