Correlation Between FC Investment and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both FC Investment and PPHE 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 FC Investment and PPHE Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and PPHE Hotel Group, you can compare the effects of market volatilities on FC Investment and PPHE 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 FC Investment with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and PPHE Hotel.
Diversification Opportunities for FC Investment and PPHE Hotel
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FCIT and PPHE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group and FC Investment 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 FC Investment Trust are associated (or correlated) with PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of FC Investment i.e., FC Investment and PPHE Hotel go up and down completely randomly.
Pair Corralation between FC Investment and PPHE Hotel
Assuming the 90 days trading horizon FC Investment is expected to generate 1.07 times less return on investment than PPHE Hotel. But when comparing it to its historical volatility, FC Investment Trust is 2.04 times less risky than PPHE Hotel. It trades about 0.05 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 108,566 in PPHE Hotel Group on October 13, 2024 and sell it today you would earn a total of 16,434 from holding PPHE Hotel Group or generate 15.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
FC Investment Trust vs. PPHE Hotel Group
Performance |
| Timeline |
| FC Investment Trust |
| PPHE Hotel Group |
FC Investment and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and PPHE Hotel
The main advantage of trading using opposite FC Investment and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, PPHE 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| FC Investment vs. Ion Beam Applications | FC Investment vs. Lundin Mining Corp | FC Investment vs. Various Eateries PLC | FC Investment vs. GlobalData PLC |
| PPHE Hotel vs. FC Investment Trust | PPHE Hotel vs. Mobius Investment Trust | PPHE Hotel vs. New Residential Investment | PPHE Hotel vs. EJF Investments |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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