Correlation Between Hotel Property and Prime Financial
Can any of the company-specific risk be diversified away by investing in both Hotel Property and Prime Financial 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 Prime Financial 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 Prime Financial Group, you can compare the effects of market volatilities on Hotel Property and Prime Financial 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 Prime Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Prime Financial.
Diversification Opportunities for Hotel Property and Prime Financial
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hotel and Prime is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Prime Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Financial Group 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 Prime Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Financial Group has no effect on the direction of Hotel Property i.e., Hotel Property and Prime Financial go up and down completely randomly.
Pair Corralation between Hotel Property and Prime Financial
Assuming the 90 days trading horizon Hotel Property Investments is expected to generate 0.28 times more return on investment than Prime Financial. However, Hotel Property Investments is 3.54 times less risky than Prime Financial. It trades about 0.38 of its potential returns per unit of risk. Prime Financial Group is currently generating about -0.08 per unit of risk. If you would invest 352.00 in Hotel Property Investments on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Hotel Property Investments or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Property Investments vs. Prime Financial Group
Performance |
| Timeline |
| Hotel Property Inves |
| Prime Financial Group |
Hotel Property and Prime Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Property and Prime Financial
The main advantage of trading using opposite Hotel Property and Prime Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Property position performs unexpectedly, Prime Financial 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 Prime Financial will offset losses from the drop in Prime Financial's long position.| Hotel Property vs. Queste Communications | Hotel Property vs. Super Retail Group | Hotel Property vs. Retail Food Group | Hotel Property vs. Spirit Telecom |
| Prime Financial vs. WA1 Resources | Prime Financial vs. Predictive Discovery | Prime Financial vs. Cooper Metals | Prime Financial vs. OD6 Metals |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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