Correlation Between Choice Hotels and GreenTree Hospitality
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and GreenTree Hospitality 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 Choice Hotels and GreenTree Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choice Hotels International and GreenTree Hospitality Group, you can compare the effects of market volatilities on Choice Hotels and GreenTree Hospitality 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 Choice Hotels with a short position of GreenTree Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and GreenTree Hospitality.
Diversification Opportunities for Choice Hotels and GreenTree Hospitality
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Choice and GreenTree is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and GreenTree Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenTree Hospitality and Choice 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 Choice Hotels International are associated (or correlated) with GreenTree Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenTree Hospitality has no effect on the direction of Choice Hotels i.e., Choice Hotels and GreenTree Hospitality go up and down completely randomly.
Pair Corralation between Choice Hotels and GreenTree Hospitality
Considering the 90-day investment horizon Choice Hotels International is expected to generate 0.52 times more return on investment than GreenTree Hospitality. However, Choice Hotels International is 1.94 times less risky than GreenTree Hospitality. It trades about 0.36 of its potential returns per unit of risk. GreenTree Hospitality Group is currently generating about -0.24 per unit of risk. If you would invest 14,084 in Choice Hotels International on August 28, 2024 and sell it today you would earn a total of 1,189 from holding Choice Hotels International or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. GreenTree Hospitality Group
Performance |
| Timeline |
| Choice Hotels Intern |
| GreenTree Hospitality |
Choice Hotels and GreenTree Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and GreenTree Hospitality
The main advantage of trading using opposite Choice Hotels and GreenTree Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, GreenTree Hospitality 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 GreenTree Hospitality will offset losses from the drop in GreenTree Hospitality's long position.| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. Marriott International |
| GreenTree Hospitality vs. LuxUrban Hotels | GreenTree Hospitality vs. InterContinental Hotels Group | GreenTree Hospitality vs. Atour Lifestyle Holdings | GreenTree Hospitality vs. Huazhu Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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