Correlation Between Diamondrock Hospitality and HEXINDO ADIPERKASA
Can any of the company-specific risk be diversified away by investing in both Diamondrock Hospitality and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamondrock Hospitality Co and HEXINDO ADIPERKASA, you can compare the effects of market volatilities on Diamondrock Hospitality and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamondrock Hospitality and HEXINDO ADIPERKASA.
Diversification Opportunities for Diamondrock Hospitality and HEXINDO ADIPERKASA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diamondrock and HEXINDO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Diamondrock Hospitality Co and HEXINDO ADIPERKASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXINDO ADIPERKASA 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 Co are associated (or correlated) with HEXINDO ADIPERKASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXINDO ADIPERKASA has no effect on the direction of Diamondrock Hospitality i.e., Diamondrock Hospitality and HEXINDO ADIPERKASA go up and down completely randomly.
Pair Corralation between Diamondrock Hospitality and HEXINDO ADIPERKASA
Assuming the 90 days trading horizon Diamondrock Hospitality Co is expected to generate 0.93 times more return on investment than HEXINDO ADIPERKASA. However, Diamondrock Hospitality Co is 1.08 times less risky than HEXINDO ADIPERKASA. It trades about -0.24 of its potential returns per unit of risk. HEXINDO ADIPERKASA is currently generating about -0.3 per unit of risk. If you would invest 860.00 in Diamondrock Hospitality Co on November 28, 2024 and sell it today you would lose (80.00) from holding Diamondrock Hospitality Co or give up 9.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Diamondrock Hospitality Co vs. HEXINDO ADIPERKASA
Performance |
| Timeline |
| Diamondrock Hospitality |
| HEXINDO ADIPERKASA |
Diamondrock Hospitality and HEXINDO ADIPERKASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamondrock Hospitality and HEXINDO ADIPERKASA
The main advantage of trading using opposite Diamondrock Hospitality and HEXINDO ADIPERKASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamondrock Hospitality position performs unexpectedly, HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA will offset losses from the drop in HEXINDO ADIPERKASA's long position.| Diamondrock Hospitality vs. NORTHEAST UTILITIES | Diamondrock Hospitality vs. Coeur Mining | Diamondrock Hospitality vs. GRIFFIN MINING LTD | Diamondrock Hospitality vs. Harmony Gold Mining |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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