Correlation Between Covivio Hotels and CMG Cleantech
Can any of the company-specific risk be diversified away by investing in both Covivio Hotels and CMG Cleantech 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 Covivio Hotels and CMG Cleantech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Covivio Hotels and CMG Cleantech SA, you can compare the effects of market volatilities on Covivio Hotels and CMG Cleantech 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 Covivio Hotels with a short position of CMG Cleantech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covivio Hotels and CMG Cleantech.
Diversification Opportunities for Covivio Hotels and CMG Cleantech
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Covivio and CMG is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Covivio Hotels and CMG Cleantech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Cleantech SA and Covivio 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 Covivio Hotels are associated (or correlated) with CMG Cleantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Cleantech SA has no effect on the direction of Covivio Hotels i.e., Covivio Hotels and CMG Cleantech go up and down completely randomly.
Pair Corralation between Covivio Hotels and CMG Cleantech
Assuming the 90 days trading horizon Covivio Hotels is expected to under-perform the CMG Cleantech. But the stock apears to be less risky and, when comparing its historical volatility, Covivio Hotels is 1.97 times less risky than CMG Cleantech. The stock trades about -0.12 of its potential returns per unit of risk. The CMG Cleantech SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 120.00 in CMG Cleantech SA on September 1, 2024 and sell it today you would earn a total of 3.00 from holding CMG Cleantech SA or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Covivio Hotels vs. CMG Cleantech SA
Performance |
| Timeline |
| Covivio Hotels |
| CMG Cleantech SA |
Covivio Hotels and CMG Cleantech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Covivio Hotels and CMG Cleantech
The main advantage of trading using opposite Covivio Hotels and CMG Cleantech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covivio Hotels position performs unexpectedly, CMG Cleantech 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 CMG Cleantech will offset losses from the drop in CMG Cleantech's long position.| Covivio Hotels vs. Covivio SA | Covivio Hotels vs. Altarea SCA | Covivio Hotels vs. Carmila SA | Covivio Hotels vs. Icade SA |
| CMG Cleantech vs. EPC Groupe | CMG Cleantech vs. Groupe Sfpi | CMG Cleantech vs. Baikowski SASU | CMG Cleantech vs. NSE SA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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