Correlation Between Grupo Hotelero and Roche Holding
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero and Roche Holding 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 Grupo Hotelero and Roche Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Hotelero Santa and Roche Holding AG, you can compare the effects of market volatilities on Grupo Hotelero and Roche Holding 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 Grupo Hotelero with a short position of Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Roche Holding.
Diversification Opportunities for Grupo Hotelero and Roche Holding
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grupo and Roche is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Roche Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding AG and Grupo Hotelero 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 Grupo Hotelero Santa are associated (or correlated) with Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding AG has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Roche Holding go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Roche Holding
Assuming the 90 days trading horizon Grupo Hotelero is expected to generate 1.04 times less return on investment than Roche Holding. In addition to that, Grupo Hotelero is 1.36 times more volatile than Roche Holding AG. It trades about 0.01 of its total potential returns per unit of risk. Roche Holding AG is currently generating about 0.01 per unit of volatility. If you would invest 589,998 in Roche Holding AG on September 14, 2024 and sell it today you would earn a total of 4,516 from holding Roche Holding AG or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. Roche Holding AG
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Roche Holding AG |
Grupo Hotelero and Roche Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Roche Holding
The main advantage of trading using opposite Grupo Hotelero and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero position performs unexpectedly, Roche Holding 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 Roche Holding will offset losses from the drop in Roche Holding's long position.| Grupo Hotelero vs. Verizon Communications | Grupo Hotelero vs. Applied Materials | Grupo Hotelero vs. Grupo Sports World | Grupo Hotelero vs. CVS Health |
| Roche Holding vs. Verizon Communications | Roche Holding vs. GMxico Transportes SAB | Roche Holding vs. Martin Marietta Materials | Roche Holding vs. Grupo Hotelero Santa |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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