Correlation Between Herald Investment and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both Herald Investment and PPHE Hotel 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 Herald Investment and PPHE Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and PPHE Hotel Group, you can compare the effects of market volatilities on Herald Investment and PPHE Hotel 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 Herald Investment with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and PPHE Hotel.
Diversification Opportunities for Herald Investment and PPHE Hotel
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herald and PPHE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group and Herald Investment 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 Herald Investment Trust are associated (or correlated) with PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of Herald Investment i.e., Herald Investment and PPHE Hotel go up and down completely randomly.
Pair Corralation between Herald Investment and PPHE Hotel
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.75 times more return on investment than PPHE Hotel. However, Herald Investment Trust is 1.34 times less risky than PPHE Hotel. It trades about 0.07 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about -0.04 per unit of risk. If you would invest 245,000 in Herald Investment Trust on October 11, 2024 and sell it today you would earn a total of 4,000 from holding Herald Investment Trust or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. PPHE Hotel Group
Performance |
| Timeline |
| Herald Investment Trust |
| PPHE Hotel Group |
Herald Investment and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and PPHE Hotel
The main advantage of trading using opposite Herald Investment and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, PPHE Hotel 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| Herald Investment vs. Cizzle Biotechnology Holdings | Herald Investment vs. Arrow Electronics | Herald Investment vs. SMA Solar Technology | Herald Investment vs. Darden Restaurants |
| PPHE Hotel vs. Beazer Homes USA | PPHE Hotel vs. Herald Investment Trust | PPHE Hotel vs. Zurich Insurance Group | PPHE Hotel vs. Travel Leisure Co |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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