Correlation Between Host Hotels and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Host Hotels and CHINA EDUCATION 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 Host Hotels and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Host Hotels and CHINA EDUCATION 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 Host Hotels with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and CHINA EDUCATION.
Diversification Opportunities for Host Hotels and CHINA EDUCATION
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Host and CHINA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and Host Hotels 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 Host Hotels Resorts are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Host Hotels i.e., Host Hotels and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Host Hotels and CHINA EDUCATION
Assuming the 90 days horizon Host Hotels Resorts is expected to generate 0.48 times more return on investment than CHINA EDUCATION. However, Host Hotels Resorts is 2.07 times less risky than CHINA EDUCATION. It trades about 0.21 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about -0.28 per unit of risk. If you would invest 1,570 in Host Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 160.00 from holding Host Hotels Resorts or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Host Hotels Resorts |
| CHINA EDUCATION GROUP |
Host Hotels and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and CHINA EDUCATION
The main advantage of trading using opposite Host Hotels and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Host Hotels vs. Compagnie Plastic Omnium | Host Hotels vs. MEDICAL FACILITIES NEW | Host Hotels vs. Mitsubishi Materials | Host Hotels vs. IMAGIN MEDICAL INC |
| CHINA EDUCATION vs. INDOFOOD AGRI RES | CHINA EDUCATION vs. MUTUIONLINE | CHINA EDUCATION vs. Gruppo Mutuionline SpA | CHINA EDUCATION vs. GLG LIFE TECH |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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