Correlation Between China Resources and Wyndham Hotels
Can any of the company-specific risk be diversified away by investing in both China Resources and Wyndham Hotels 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 China Resources and Wyndham Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Land and Wyndham Hotels Resorts, you can compare the effects of market volatilities on China Resources and Wyndham Hotels 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 China Resources with a short position of Wyndham Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Wyndham Hotels.
Diversification Opportunities for China Resources and Wyndham Hotels
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Wyndham is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land and Wyndham Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Hotels Resorts and China Resources 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 China Resources Land are associated (or correlated) with Wyndham Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyndham Hotels Resorts has no effect on the direction of China Resources i.e., China Resources and Wyndham Hotels go up and down completely randomly.
Pair Corralation between China Resources and Wyndham Hotels
Assuming the 90 days horizon China Resources Land is expected to under-perform the Wyndham Hotels. In addition to that, China Resources is 1.63 times more volatile than Wyndham Hotels Resorts. It trades about -0.06 of its total potential returns per unit of risk. Wyndham Hotels Resorts is currently generating about 0.2 per unit of volatility. If you would invest 9,050 in Wyndham Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 600.00 from holding Wyndham Hotels Resorts or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Resources Land vs. Wyndham Hotels Resorts
Performance |
| Timeline |
| China Resources Land |
| Wyndham Hotels Resorts |
China Resources and Wyndham Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Wyndham Hotels
The main advantage of trading using opposite China Resources and Wyndham Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Wyndham Hotels 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 Wyndham Hotels will offset losses from the drop in Wyndham Hotels' long position.| China Resources vs. REGAL ASIAN INVESTMENTS | China Resources vs. SMA Solar Technology | China Resources vs. Japan Asia Investment | China Resources vs. MACOM Technology Solutions |
| Wyndham Hotels vs. Hyatt Hotels | Wyndham Hotels vs. InterContinental Hotels Group | Wyndham Hotels vs. INTERCONT HOTELS | Wyndham Hotels vs. Choice Hotels International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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