Correlation Between Consolidated Construction and EIH Associated
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By analyzing existing cross correlation between Consolidated Construction Consortium and EIH Associated Hotels, you can compare the effects of market volatilities on Consolidated Construction and EIH Associated 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 Consolidated Construction with a short position of EIH Associated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Construction and EIH Associated.
Diversification Opportunities for Consolidated Construction and EIH Associated
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Consolidated and EIH is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Construction Cons and EIH Associated Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIH Associated Hotels and Consolidated Construction 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 Consolidated Construction Consortium are associated (or correlated) with EIH Associated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIH Associated Hotels has no effect on the direction of Consolidated Construction i.e., Consolidated Construction and EIH Associated go up and down completely randomly.
Pair Corralation between Consolidated Construction and EIH Associated
Assuming the 90 days trading horizon Consolidated Construction Consortium is expected to under-perform the EIH Associated. In addition to that, Consolidated Construction is 1.22 times more volatile than EIH Associated Hotels. It trades about -0.15 of its total potential returns per unit of risk. EIH Associated Hotels is currently generating about 0.03 per unit of volatility. If you would invest 39,600 in EIH Associated Hotels on October 12, 2024 and sell it today you would earn a total of 1,060 from holding EIH Associated Hotels or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Construction Cons vs. EIH Associated Hotels
Performance |
| Timeline |
| Consolidated Construction |
| EIH Associated Hotels |
Consolidated Construction and EIH Associated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Construction and EIH Associated
The main advantage of trading using opposite Consolidated Construction and EIH Associated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Construction position performs unexpectedly, EIH Associated 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 EIH Associated will offset losses from the drop in EIH Associated's long position.The idea behind Consolidated Construction Consortium and EIH Associated Hotels 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.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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