Correlation Between Choice Hotels and Primega Group
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Primega Group 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 Primega Group 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 Primega Group Holdings, you can compare the effects of market volatilities on Choice Hotels and Primega Group 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 Primega Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Primega Group.
Diversification Opportunities for Choice Hotels and Primega Group
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Choice and Primega is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Primega Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primega Group Holdings 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 Primega Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primega Group Holdings has no effect on the direction of Choice Hotels i.e., Choice Hotels and Primega Group go up and down completely randomly.
Pair Corralation between Choice Hotels and Primega Group
Considering the 90-day investment horizon Choice Hotels is expected to generate 101.08 times less return on investment than Primega Group. But when comparing it to its historical volatility, Choice Hotels International is 184.11 times less risky than Primega Group. It trades about 0.31 of its potential returns per unit of risk. Primega Group Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,910 in Primega Group Holdings on August 29, 2024 and sell it today you would lose (1,696) from holding Primega Group Holdings or give up 88.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Primega Group Holdings
Performance |
| Timeline |
| Choice Hotels Intern |
| Primega Group Holdings |
Choice Hotels and Primega Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Primega Group
The main advantage of trading using opposite Choice Hotels and Primega Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Primega Group 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 Primega Group will offset losses from the drop in Primega Group'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 |
| Primega Group vs. Toro Co | Primega Group vs. Sellas Life Sciences | Primega Group vs. Estee Lauder Companies | Primega Group vs. Steven Madden |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |