Correlation Between Aclara Resources and American Hotel
Can any of the company-specific risk be diversified away by investing in both Aclara Resources and American Hotel 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 Aclara Resources and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aclara Resources and American Hotel Income, you can compare the effects of market volatilities on Aclara Resources and American Hotel 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 Aclara Resources with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aclara Resources and American Hotel.
Diversification Opportunities for Aclara Resources and American Hotel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aclara and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aclara Resources and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and Aclara Resources 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 Aclara Resources are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Aclara Resources i.e., Aclara Resources and American Hotel go up and down completely randomly.
Pair Corralation between Aclara Resources and American Hotel
Assuming the 90 days trading horizon Aclara Resources is expected to generate 11.31 times less return on investment than American Hotel. But when comparing it to its historical volatility, Aclara Resources is 1.1 times less risky than American Hotel. It trades about 0.02 of its potential returns per unit of risk. American Hotel Income is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 50.00 in American Hotel Income on October 23, 2024 and sell it today you would earn a total of 13.00 from holding American Hotel Income or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aclara Resources vs. American Hotel Income
Performance |
| Timeline |
| Aclara Resources |
| American Hotel Income |
Aclara Resources and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aclara Resources and American Hotel
The main advantage of trading using opposite Aclara Resources and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aclara Resources position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.The idea behind Aclara Resources and American Hotel Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| American Hotel vs. Orca Energy Group | American Hotel vs. Rogers Communications | American Hotel vs. Aclara Resources | American Hotel vs. Buhler Industries |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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