Correlation Between China Communications and COVIVIO HOTELS
Can any of the company-specific risk be diversified away by investing in both China Communications and COVIVIO 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 Communications and COVIVIO HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and COVIVIO HOTELS INH, you can compare the effects of market volatilities on China Communications and COVIVIO 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 Communications with a short position of COVIVIO HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and COVIVIO HOTELS.
Diversification Opportunities for China Communications and COVIVIO HOTELS
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and COVIVIO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and COVIVIO HOTELS INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVIVIO HOTELS INH and China Communications 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 Communications Services are associated (or correlated) with COVIVIO HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVIVIO HOTELS INH has no effect on the direction of China Communications i.e., China Communications and COVIVIO HOTELS go up and down completely randomly.
Pair Corralation between China Communications and COVIVIO HOTELS
Assuming the 90 days horizon China Communications is expected to generate 1.45 times less return on investment than COVIVIO HOTELS. But when comparing it to its historical volatility, China Communications Services is 1.15 times less risky than COVIVIO HOTELS. It trades about 0.08 of its potential returns per unit of risk. COVIVIO HOTELS INH is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,815 in COVIVIO HOTELS INH on November 8, 2024 and sell it today you would earn a total of 105.00 from holding COVIVIO HOTELS INH or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. COVIVIO HOTELS INH
Performance |
| Timeline |
| China Communications |
| COVIVIO HOTELS INH |
China Communications and COVIVIO HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and COVIVIO HOTELS
The main advantage of trading using opposite China Communications and COVIVIO HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, COVIVIO 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 COVIVIO HOTELS will offset losses from the drop in COVIVIO HOTELS's long position.| China Communications vs. T Mobile | China Communications vs. China Mobile Limited | China Communications vs. Verizon Communications | China Communications vs. ATT Inc |
| COVIVIO HOTELS vs. Gol Intelligent Airlines | COVIVIO HOTELS vs. Fukuyama Transporting Co | COVIVIO HOTELS vs. Gaztransport Technigaz SA | COVIVIO HOTELS vs. Air Transport Services |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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