Correlation Between CeoTronics and InterContinental
Can any of the company-specific risk be diversified away by investing in both CeoTronics and InterContinental 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 CeoTronics and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CeoTronics AG and InterContinental Hotels Group, you can compare the effects of market volatilities on CeoTronics and InterContinental 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 CeoTronics with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of CeoTronics and InterContinental.
Diversification Opportunities for CeoTronics and InterContinental
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CeoTronics and InterContinental is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and CeoTronics 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 CeoTronics AG are associated (or correlated) with InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of CeoTronics i.e., CeoTronics and InterContinental go up and down completely randomly.
Pair Corralation between CeoTronics and InterContinental
Assuming the 90 days trading horizon CeoTronics AG is expected to under-perform the InterContinental. In addition to that, CeoTronics is 1.64 times more volatile than InterContinental Hotels Group. It trades about -0.05 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.12 per unit of volatility. If you would invest 11,800 in InterContinental Hotels Group on October 30, 2024 and sell it today you would earn a total of 700.00 from holding InterContinental Hotels Group or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CeoTronics AG vs. InterContinental Hotels Group
Performance |
| Timeline |
| CeoTronics AG |
| InterContinental Hotels |
CeoTronics and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CeoTronics and InterContinental
The main advantage of trading using opposite CeoTronics and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| CeoTronics vs. Motorola Solutions | CeoTronics vs. Nokia | CeoTronics vs. Nokia | CeoTronics vs. Telefonaktiebolaget LM Ericsson |
| InterContinental vs. MPH Health Care | InterContinental vs. National Health Investors | InterContinental vs. Cardinal Health | InterContinental vs. CLOVER HEALTH INV |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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