Correlation Between FUYO GENERAL and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both FUYO GENERAL and Choice Hotels 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 FUYO GENERAL and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUYO GENERAL LEASE and Choice Hotels International, you can compare the effects of market volatilities on FUYO GENERAL and Choice Hotels 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 FUYO GENERAL with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUYO GENERAL and Choice Hotels.
Diversification Opportunities for FUYO GENERAL and Choice Hotels
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FUYO and Choice is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding FUYO GENERAL LEASE and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and FUYO GENERAL 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 FUYO GENERAL LEASE are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of FUYO GENERAL i.e., FUYO GENERAL and Choice Hotels go up and down completely randomly.
Pair Corralation between FUYO GENERAL and Choice Hotels
Assuming the 90 days horizon FUYO GENERAL is expected to generate 1.81 times less return on investment than Choice Hotels. But when comparing it to its historical volatility, FUYO GENERAL LEASE is 1.09 times less risky than Choice Hotels. It trades about 0.06 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13,272 in Choice Hotels International on November 7, 2024 and sell it today you would earn a total of 928.00 from holding Choice Hotels International or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FUYO GENERAL LEASE vs. Choice Hotels International
Performance |
| Timeline |
| FUYO GENERAL LEASE |
| Choice Hotels Intern |
FUYO GENERAL and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUYO GENERAL and Choice Hotels
The main advantage of trading using opposite FUYO GENERAL and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUYO GENERAL position performs unexpectedly, Choice Hotels 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| FUYO GENERAL vs. Suntory Beverage Food | FUYO GENERAL vs. MTY Food Group | FUYO GENERAL vs. GREENX METALS LTD | FUYO GENERAL vs. GWILLI FOOD |
| Choice Hotels vs. Align Technology | Choice Hotels vs. Yuexiu Transport Infrastructure | Choice Hotels vs. Gaztransport Technigaz SA | Choice Hotels vs. Television Broadcasts Limited |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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