Correlation Between East Side and American Hotel
Can any of the company-specific risk be diversified away by investing in both East Side and American Hotel 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 East Side and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Side Games and American Hotel Income, you can compare the effects of market volatilities on East Side and American Hotel 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 East Side with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and American Hotel.
Diversification Opportunities for East Side and American Hotel
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between East and American is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and East Side 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 East Side Games are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of East Side i.e., East Side and American Hotel go up and down completely randomly.
Pair Corralation between East Side and American Hotel
Assuming the 90 days trading horizon East Side Games is expected to under-perform the American Hotel. But the stock apears to be less risky and, when comparing its historical volatility, East Side Games is 1.14 times less risky than American Hotel. The stock trades about -0.08 of its potential returns per unit of risk. The American Hotel Income is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 58.00 in American Hotel Income on October 25, 2024 and sell it today you would earn a total of 6.00 from holding American Hotel Income or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Side Games vs. American Hotel Income
Performance |
| Timeline |
| East Side Games |
| American Hotel Income |
East Side and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Side and American Hotel
The main advantage of trading using opposite East Side and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.| East Side vs. Sangoma Technologies Corp | East Side vs. Vitalhub Corp | East Side vs. Propel Holdings | East Side vs. D2L Inc |
| American Hotel vs. Datable Technology Corp | American Hotel vs. East Side Games | American Hotel vs. Gamehost | American Hotel vs. Quipt Home Medical |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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