Correlation Between DiamondRock Hospitality and Hang Seng
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and Hang Seng 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 DiamondRock Hospitality and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and Hang Seng Bank, you can compare the effects of market volatilities on DiamondRock Hospitality and Hang Seng 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 DiamondRock Hospitality with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Hang Seng.
Diversification Opportunities for DiamondRock Hospitality and Hang Seng
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DiamondRock and Hang is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng Bank and DiamondRock Hospitality 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 DiamondRock Hospitality are associated (or correlated) with Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and Hang Seng go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Hang Seng
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 2.59 times more return on investment than Hang Seng. However, DiamondRock Hospitality is 2.59 times more volatile than Hang Seng Bank. It trades about 0.28 of its potential returns per unit of risk. Hang Seng Bank is currently generating about -0.03 per unit of risk. If you would invest 735.00 in DiamondRock Hospitality on September 1, 2024 and sell it today you would earn a total of 120.00 from holding DiamondRock Hospitality or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
DiamondRock Hospitality vs. Hang Seng Bank
Performance |
| Timeline |
| DiamondRock Hospitality |
| Hang Seng Bank |
DiamondRock Hospitality and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Hang Seng
The main advantage of trading using opposite DiamondRock Hospitality and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng's long position.| DiamondRock Hospitality vs. Sotherly Hotels | DiamondRock Hospitality vs. Superior Plus Corp | DiamondRock Hospitality vs. NMI Holdings | DiamondRock Hospitality vs. Origin Agritech |
| Hang Seng vs. British American Tobacco | Hang Seng vs. International Game Technology | Hang Seng vs. HEALTHCARE REAL A | Hang Seng vs. DiamondRock Hospitality |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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