Correlation Between ASX and Hotel Property
Can any of the company-specific risk be diversified away by investing in both ASX and Hotel Property 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 ASX and Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASX and Hotel Property Investments, you can compare the effects of market volatilities on ASX and Hotel Property 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 ASX with a short position of Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASX and Hotel Property.
Diversification Opportunities for ASX and Hotel Property
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between ASX and Hotel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ASX and Hotel Property Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Property Inves and ASX 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 ASX are associated (or correlated) with Hotel Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Property Inves has no effect on the direction of ASX i.e., ASX and Hotel Property go up and down completely randomly.
Pair Corralation between ASX and Hotel Property
Assuming the 90 days trading horizon ASX is expected to generate 2.06 times less return on investment than Hotel Property. But when comparing it to its historical volatility, ASX is 1.07 times less risky than Hotel Property. It trades about 0.04 of its potential returns per unit of risk. Hotel Property Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 321.00 in Hotel Property Investments on September 3, 2024 and sell it today you would earn a total of 49.00 from holding Hotel Property Investments or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASX vs. Hotel Property Investments
Performance |
| Timeline |
| ASX |
| Hotel Property Inves |
ASX and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASX and Hotel Property
The main advantage of trading using opposite ASX and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASX position performs unexpectedly, Hotel Property 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 Hotel Property will offset losses from the drop in Hotel Property's long position.The idea behind ASX and Hotel Property Investments 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.| Hotel Property vs. GDI Property Group | Hotel Property vs. Champion Iron | Hotel Property vs. iShares Global Healthcare | Hotel Property vs. Peel Mining |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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