Correlation Between Les Hotels and SA Catana
Can any of the company-specific risk be diversified away by investing in both Les Hotels and SA Catana 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 SA Catana 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 SA Catana Group, you can compare the effects of market volatilities on Les Hotels and SA Catana 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 SA Catana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and SA Catana.
Diversification Opportunities for Les Hotels and SA Catana
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Les and CATG is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and SA Catana Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SA Catana Group 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 SA Catana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SA Catana Group has no effect on the direction of Les Hotels i.e., Les Hotels and SA Catana go up and down completely randomly.
Pair Corralation between Les Hotels and SA Catana
Assuming the 90 days trading horizon Les Hotels Bav is expected to generate 0.88 times more return on investment than SA Catana. However, Les Hotels Bav is 1.14 times less risky than SA Catana. It trades about 0.03 of its potential returns per unit of risk. SA Catana Group is currently generating about 0.0 per unit of risk. If you would invest 5,700 in Les Hotels Bav on August 26, 2024 and sell it today you would earn a total of 1,400 from holding Les Hotels Bav or generate 24.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.87% |
| Values | Daily Returns |
Les Hotels Bav vs. SA Catana Group
Performance |
| Timeline |
| Les Hotels Bav |
| SA Catana Group |
Les Hotels and SA Catana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Hotels and SA Catana
The main advantage of trading using opposite Les Hotels and SA Catana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Hotels position performs unexpectedly, SA Catana 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 SA Catana will offset losses from the drop in SA Catana's long position.| Les Hotels vs. SA Catana Group | Les Hotels vs. Reworld Media | Les Hotels vs. Biosynex | Les Hotels vs. Moulinvest |
| SA Catana vs. Novatech Industries SA | SA Catana vs. CMG Cleantech SA | SA Catana vs. Jacquet Metal Service | SA Catana vs. Axway Software |
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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