Correlation Between Les Hotels and ATEME SA
Can any of the company-specific risk be diversified away by investing in both Les Hotels and ATEME SA 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 ATEME SA 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 ATEME SA, you can compare the effects of market volatilities on Les Hotels and ATEME SA 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 ATEME SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and ATEME SA.
Diversification Opportunities for Les Hotels and ATEME SA
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Les and ATEME is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and ATEME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATEME 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 ATEME SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATEME SA has no effect on the direction of Les Hotels i.e., Les Hotels and ATEME SA go up and down completely randomly.
Pair Corralation between Les Hotels and ATEME SA
Assuming the 90 days trading horizon Les Hotels Bav is expected to generate 0.58 times more return on investment than ATEME SA. However, Les Hotels Bav is 1.72 times less risky than ATEME SA. It trades about 0.04 of its potential returns per unit of risk. ATEME SA is currently generating about -0.03 per unit of risk. If you would invest 5,925 in Les Hotels Bav on September 12, 2024 and sell it today you would earn a total of 1,225 from holding Les Hotels Bav or generate 20.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.32% |
| Values | Daily Returns |
Les Hotels Bav vs. ATEME SA
Performance |
| Timeline |
| Les Hotels Bav |
| ATEME SA |
Les Hotels and ATEME SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Hotels and ATEME SA
The main advantage of trading using opposite Les Hotels and ATEME SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Hotels position performs unexpectedly, ATEME SA 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 ATEME SA will offset losses from the drop in ATEME SA's long position.| Les Hotels vs. SA Catana Group | Les Hotels vs. Verallia | Les Hotels vs. Thermador Groupe SA | Les Hotels vs. Maisons du Monde |
| ATEME SA vs. X Fab Silicon | ATEME SA vs. Les Hotels Bav | ATEME SA vs. Axway Software | ATEME SA vs. Seche Environnem |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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