Correlation Between Choice Hotels and AMA Group
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and AMA Group 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 AMA Group 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 AMA Group Limited, you can compare the effects of market volatilities on Choice Hotels and AMA Group 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 AMA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and AMA Group.
Diversification Opportunities for Choice Hotels and AMA Group
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Choice and AMA is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and AMA Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMA Group Limited 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 AMA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMA Group Limited has no effect on the direction of Choice Hotels i.e., Choice Hotels and AMA Group go up and down completely randomly.
Pair Corralation between Choice Hotels and AMA Group
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.41 times more return on investment than AMA Group. However, Choice Hotels International is 2.47 times less risky than AMA Group. It trades about 0.32 of its potential returns per unit of risk. AMA Group Limited is currently generating about -0.07 per unit of risk. If you would invest 12,700 in Choice Hotels International on September 2, 2024 and sell it today you would earn a total of 1,400 from holding Choice Hotels International or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. AMA Group Limited
Performance |
| Timeline |
| Choice Hotels Intern |
| AMA Group Limited |
Choice Hotels and AMA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and AMA Group
The main advantage of trading using opposite Choice Hotels and AMA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, AMA Group 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 AMA Group will offset losses from the drop in AMA Group's long position.| Choice Hotels vs. Coeur Mining | Choice Hotels vs. MINCO SILVER | Choice Hotels vs. FORMPIPE SOFTWARE AB | Choice Hotels vs. Calibre Mining Corp |
| AMA Group vs. Datang International Power | AMA Group vs. Hyrican Informationssysteme Aktiengesellschaft | AMA Group vs. Cass Information Systems | AMA Group vs. RELIANCE STEEL AL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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