Correlation Between Hotel Property and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Hotel Property and ACDC Metals 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 Hotel Property and ACDC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Property Investments and ACDC Metals, you can compare the effects of market volatilities on Hotel Property and ACDC Metals 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 Hotel Property with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and ACDC Metals.
Diversification Opportunities for Hotel Property and ACDC Metals
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hotel and ACDC is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Hotel Property 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 Hotel Property Investments are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Hotel Property i.e., Hotel Property and ACDC Metals go up and down completely randomly.
Pair Corralation between Hotel Property and ACDC Metals
Assuming the 90 days trading horizon Hotel Property Investments is expected to generate 0.04 times more return on investment than ACDC Metals. However, Hotel Property Investments is 22.83 times less risky than ACDC Metals. It trades about 0.08 of its potential returns per unit of risk. ACDC Metals is currently generating about -0.12 per unit of risk. If you would invest 375.00 in Hotel Property Investments on November 7, 2024 and sell it today you would earn a total of 1.00 from holding Hotel Property Investments or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hotel Property Investments vs. ACDC Metals
Performance |
| Timeline |
| Hotel Property Inves |
| ACDC Metals |
Hotel Property and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Property and ACDC Metals
The main advantage of trading using opposite Hotel Property and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property position performs unexpectedly, ACDC Metals 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Hotel Property vs. Alternative Investment Trust | Hotel Property vs. Infomedia | Hotel Property vs. oOhMedia | Hotel Property vs. TPG Telecom |
| ACDC Metals vs. Aussie Broadband | ACDC Metals vs. Beam Communications Holdings | ACDC Metals vs. Global Health | ACDC Metals vs. Infomedia |
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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