Correlation Between Les Hotels and X Fab
Can any of the company-specific risk be diversified away by investing in both Les Hotels and X Fab 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 X Fab 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 X Fab Silicon, you can compare the effects of market volatilities on Les Hotels and X Fab 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 X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and X Fab.
Diversification Opportunities for Les Hotels and X Fab
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Les and XFAB is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of Les Hotels i.e., Les Hotels and X Fab go up and down completely randomly.
Pair Corralation between Les Hotels and X Fab
Assuming the 90 days trading horizon Les Hotels Bav is expected to generate 0.64 times more return on investment than X Fab. However, Les Hotels Bav is 1.57 times less risky than X Fab. It trades about 0.07 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.13 per unit of risk. If you would invest 5,477 in Les Hotels Bav on August 26, 2024 and sell it today you would earn a total of 1,623 from holding Les Hotels Bav or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Les Hotels Bav vs. X Fab Silicon
Performance |
| Timeline |
| Les Hotels Bav |
| X Fab Silicon |
Les Hotels and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Hotels and X Fab
The main advantage of trading using opposite Les Hotels and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Hotels position performs unexpectedly, X Fab 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 X Fab will offset losses from the drop in X Fab's long position.| Les Hotels vs. Les Htels de | Les Hotels vs. Moulinvest | Les Hotels vs. Bernard Loisea | Les Hotels vs. Groupimo SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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