Correlation Between Choice Hotels and Yuexiu Transport
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Yuexiu Transport 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 Yuexiu Transport 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 Yuexiu Transport Infrastructure, you can compare the effects of market volatilities on Choice Hotels and Yuexiu Transport 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 Yuexiu Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Yuexiu Transport.
Diversification Opportunities for Choice Hotels and Yuexiu Transport
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Choice and Yuexiu is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Yuexiu Transport Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuexiu Transport Inf 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 Yuexiu Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuexiu Transport Inf has no effect on the direction of Choice Hotels i.e., Choice Hotels and Yuexiu Transport go up and down completely randomly.
Pair Corralation between Choice Hotels and Yuexiu Transport
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.59 times more return on investment than Yuexiu Transport. However, Choice Hotels International is 1.69 times less risky than Yuexiu Transport. It trades about 0.13 of its potential returns per unit of risk. Yuexiu Transport Infrastructure is currently generating about -0.13 per unit of risk. If you would invest 13,371 in Choice Hotels International on October 26, 2024 and sell it today you would earn a total of 429.00 from holding Choice Hotels International or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Yuexiu Transport Infrastructur
Performance |
| Timeline |
| Choice Hotels Intern |
| Yuexiu Transport Inf |
Choice Hotels and Yuexiu Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Yuexiu Transport
The main advantage of trading using opposite Choice Hotels and Yuexiu Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Yuexiu Transport 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 Yuexiu Transport will offset losses from the drop in Yuexiu Transport's long position.| Choice Hotels vs. Chengdu PUTIAN Telecommunications | Choice Hotels vs. Iridium Communications | Choice Hotels vs. THAI BEVERAGE | Choice Hotels vs. Zoom Video Communications |
| Yuexiu Transport vs. Clean Energy Fuels | Yuexiu Transport vs. YATRA ONLINE DL 0001 | Yuexiu Transport vs. Cleanaway Waste Management | Yuexiu Transport vs. SCANSOURCE |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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