Correlation Between City Lodge and Afine Investments
Can any of the company-specific risk be diversified away by investing in both City Lodge and Afine Investments 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 City Lodge and Afine Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Lodge Hotels and Afine Investments, you can compare the effects of market volatilities on City Lodge and Afine Investments 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 City Lodge with a short position of Afine Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Lodge and Afine Investments.
Diversification Opportunities for City Lodge and Afine Investments
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between City and Afine is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding City Lodge Hotels and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments and City Lodge 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 City Lodge Hotels are associated (or correlated) with Afine Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afine Investments has no effect on the direction of City Lodge i.e., City Lodge and Afine Investments go up and down completely randomly.
Pair Corralation between City Lodge and Afine Investments
Assuming the 90 days trading horizon City Lodge is expected to generate 311.43 times less return on investment than Afine Investments. But when comparing it to its historical volatility, City Lodge Hotels is 50.91 times less risky than Afine Investments. It trades about 0.01 of its potential returns per unit of risk. Afine Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 38,426 in Afine Investments on September 2, 2024 and sell it today you would earn a total of 6,574 from holding Afine Investments or generate 17.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
City Lodge Hotels vs. Afine Investments
Performance |
| Timeline |
| City Lodge Hotels |
| Afine Investments |
City Lodge and Afine Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Lodge and Afine Investments
The main advantage of trading using opposite City Lodge and Afine Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Lodge position performs unexpectedly, Afine Investments 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 Afine Investments will offset losses from the drop in Afine Investments' long position.| City Lodge vs. RCL Foods | City Lodge vs. Astral Foods | City Lodge vs. eMedia Holdings Limited | City Lodge vs. Astoria Investments |
| Afine Investments vs. Kumba Iron Ore | Afine Investments vs. Zeder Investments | Afine Investments vs. Harmony Gold Mining | Afine Investments vs. Astral Foods |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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