Correlation Between HR Block and Huazhu
Can any of the company-specific risk be diversified away by investing in both HR Block and Huazhu 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 HR Block and Huazhu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HR Block and Huazhu Group, you can compare the effects of market volatilities on HR Block and Huazhu 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 HR Block with a short position of Huazhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of HR Block and Huazhu.
Diversification Opportunities for HR Block and Huazhu
Very good diversification
The 3 months correlation between HRB and Huazhu is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding HR Block and Huazhu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huazhu Group and HR Block 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 HR Block are associated (or correlated) with Huazhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huazhu Group has no effect on the direction of HR Block i.e., HR Block and Huazhu go up and down completely randomly.
Pair Corralation between HR Block and Huazhu
Considering the 90-day investment horizon HR Block is expected to under-perform the Huazhu. But the stock apears to be less risky and, when comparing its historical volatility, HR Block is 1.89 times less risky than Huazhu. The stock trades about -0.04 of its potential returns per unit of risk. The Huazhu Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,957 in Huazhu Group on August 31, 2024 and sell it today you would earn a total of 246.00 from holding Huazhu Group or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HR Block vs. Huazhu Group
Performance |
| Timeline |
| HR Block |
| Huazhu Group |
HR Block and Huazhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HR Block and Huazhu
The main advantage of trading using opposite HR Block and Huazhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HR Block position performs unexpectedly, Huazhu 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 Huazhu will offset losses from the drop in Huazhu's long position.| HR Block vs. Bright Horizons Family | HR Block vs. Service International | HR Block vs. Carriage Services | HR Block vs. Mister Car Wash |
| Huazhu vs. GreenTree Hospitality Group | Huazhu vs. Soho House Co | Huazhu vs. InterContinental Hotels Group | Huazhu vs. The Intergroup |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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