Correlation Between INTERCONT HOTELS and ENN Energy
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and ENN Energy 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 INTERCONT HOTELS and ENN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and ENN Energy Holdings, you can compare the effects of market volatilities on INTERCONT HOTELS and ENN Energy 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 INTERCONT HOTELS with a short position of ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and ENN Energy.
Diversification Opportunities for INTERCONT HOTELS and ENN Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INTERCONT and ENN is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings and INTERCONT HOTELS 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 INTERCONT HOTELS are associated (or correlated) with ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and ENN Energy go up and down completely randomly.
Pair Corralation between INTERCONT HOTELS and ENN Energy
Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 0.35 times more return on investment than ENN Energy. However, INTERCONT HOTELS is 2.83 times less risky than ENN Energy. It trades about 0.31 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.06 per unit of risk. If you would invest 11,100 in INTERCONT HOTELS on September 12, 2024 and sell it today you would earn a total of 1,300 from holding INTERCONT HOTELS or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERCONT HOTELS vs. ENN Energy Holdings
Performance |
| Timeline |
| INTERCONT HOTELS |
| ENN Energy Holdings |
INTERCONT HOTELS and ENN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERCONT HOTELS and ENN Energy
The main advantage of trading using opposite INTERCONT HOTELS and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, ENN Energy 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 ENN Energy will offset losses from the drop in ENN Energy's long position.| INTERCONT HOTELS vs. Packaging of | INTERCONT HOTELS vs. ERSTE GP BNK | INTERCONT HOTELS vs. W R Berkley | INTERCONT HOTELS vs. News Corporation |
| ENN Energy vs. MIRAMAR HOTEL INV | ENN Energy vs. INTERCONT HOTELS | ENN Energy vs. International Game Technology | ENN Energy vs. GigaMedia |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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