Correlation Between Host Hotels and AP Møller
Can any of the company-specific risk be diversified away by investing in both Host Hotels and AP Møller 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 AP Møller 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 AP Mller , you can compare the effects of market volatilities on Host Hotels and AP Møller 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 AP Møller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and AP Møller.
Diversification Opportunities for Host Hotels and AP Møller
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Host and DP4B is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Møller 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 AP Møller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Møller has no effect on the direction of Host Hotels i.e., Host Hotels and AP Møller go up and down completely randomly.
Pair Corralation between Host Hotels and AP Møller
Assuming the 90 days horizon Host Hotels is expected to generate 2.48 times less return on investment than AP Møller. But when comparing it to its historical volatility, Host Hotels Resorts is 1.74 times less risky than AP Møller. It trades about 0.16 of its potential returns per unit of risk. AP Mller is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 147,650 in AP Mller on September 12, 2024 and sell it today you would earn a total of 18,000 from holding AP Mller or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. AP Mller
Performance |
| Timeline |
| Host Hotels Resorts |
| AP Møller |
Host Hotels and AP Møller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and AP Møller
The main advantage of trading using opposite Host Hotels and AP Møller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, AP Møller 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 AP Møller will offset losses from the drop in AP Møller's long position.| Host Hotels vs. Sunstone Hotel Investors | Host Hotels vs. Xenia Hotels Resorts | Host Hotels vs. Summit Hotel Properties | Host Hotels vs. ASHFORD HOSPITTRUST |
| AP Møller vs. Superior Plus Corp | AP Møller vs. SIVERS SEMICONDUCTORS AB | AP Møller vs. CHINA HUARONG ENERHD 50 | AP Møller vs. NORDIC HALIBUT AS |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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