Correlation Between Choice Hotels and Hyundai
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Hyundai 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 Hyundai 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 Hyundai Motor, you can compare the effects of market volatilities on Choice Hotels and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Hyundai.
Diversification Opportunities for Choice Hotels and Hyundai
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Choice and Hyundai is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Choice Hotels i.e., Choice Hotels and Hyundai go up and down completely randomly.
Pair Corralation between Choice Hotels and Hyundai
Assuming the 90 days horizon Choice Hotels is expected to generate 2.03 times less return on investment than Hyundai. But when comparing it to its historical volatility, Choice Hotels International is 1.3 times less risky than Hyundai. It trades about 0.04 of its potential returns per unit of risk. Hyundai Motor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,829 in Hyundai Motor on September 19, 2024 and sell it today you would earn a total of 1,891 from holding Hyundai Motor or generate 66.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. Hyundai Motor
Performance |
| Timeline |
| Choice Hotels Intern |
| Hyundai Motor |
Choice Hotels and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Hyundai
The main advantage of trading using opposite Choice Hotels and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. INTERCONT HOTELS | Choice Hotels vs. Wyndham Hotels Resorts |
| Hyundai vs. Xenia Hotels Resorts | Hyundai vs. Shenandoah Telecommunications | Hyundai vs. PPHE HOTEL GROUP | Hyundai 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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