Correlation Between Hotel Property and Bio Gene
Can any of the company-specific risk be diversified away by investing in both Hotel Property and Bio Gene 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 Bio Gene 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 Bio Gene Technology, you can compare the effects of market volatilities on Hotel Property and Bio Gene 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 Bio Gene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Bio Gene.
Diversification Opportunities for Hotel Property and Bio Gene
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hotel and Bio is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Bio Gene Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Gene Technology 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 Bio Gene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Gene Technology has no effect on the direction of Hotel Property i.e., Hotel Property and Bio Gene go up and down completely randomly.
Pair Corralation between Hotel Property and Bio Gene
Assuming the 90 days trading horizon Hotel Property is expected to generate 1.2 times less return on investment than Bio Gene. But when comparing it to its historical volatility, Hotel Property Investments is 5.1 times less risky than Bio Gene. It trades about 0.1 of its potential returns per unit of risk. Bio Gene Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5.40 in Bio Gene Technology on November 3, 2024 and sell it today you would lose (0.50) from holding Bio Gene Technology or give up 9.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Hotel Property Investments vs. Bio Gene Technology
Performance |
| Timeline |
| Hotel Property Inves |
| Bio Gene Technology |
Hotel Property and Bio Gene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Property and Bio Gene
The main advantage of trading using opposite Hotel Property and Bio Gene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property position performs unexpectedly, Bio Gene 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 Bio Gene will offset losses from the drop in Bio Gene's long position.| Hotel Property vs. Chalice Mining Limited | Hotel Property vs. Vulcan Steel | Hotel Property vs. Galena Mining | Hotel Property vs. The Environmental Group |
| Bio Gene vs. Galena Mining | Bio Gene vs. Infomedia | Bio Gene vs. MotorCycle Holdings | Bio Gene vs. ARN Media Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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