Correlation Between InterContinental and Shangri-La Asia
Can any of the company-specific risk be diversified away by investing in both InterContinental and Shangri-La Asia 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 InterContinental and Shangri-La Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Shangri La Asia Limited, you can compare the effects of market volatilities on InterContinental and Shangri-La Asia 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 InterContinental with a short position of Shangri-La Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Shangri-La Asia.
Diversification Opportunities for InterContinental and Shangri-La Asia
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and Shangri-La is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Shangri La Asia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Asia and InterContinental 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 InterContinental Hotels Group are associated (or correlated) with Shangri-La Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Asia has no effect on the direction of InterContinental i.e., InterContinental and Shangri-La Asia go up and down completely randomly.
Pair Corralation between InterContinental and Shangri-La Asia
Assuming the 90 days horizon InterContinental Hotels Group is expected to generate 0.84 times more return on investment than Shangri-La Asia. However, InterContinental Hotels Group is 1.19 times less risky than Shangri-La Asia. It trades about 0.11 of its potential returns per unit of risk. Shangri La Asia Limited is currently generating about 0.01 per unit of risk. If you would invest 5,621 in InterContinental Hotels Group on September 3, 2024 and sell it today you would earn a total of 6,634 from holding InterContinental Hotels Group or generate 118.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.01% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Shangri La Asia Limited
Performance |
| Timeline |
| InterContinental Hotels |
| Shangri La Asia |
InterContinental and Shangri-La Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Shangri-La Asia
The main advantage of trading using opposite InterContinental and Shangri-La Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Shangri-La Asia 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 Shangri-La Asia will offset losses from the drop in Shangri-La Asia's long position.| InterContinental vs. Hyatt Hotels | InterContinental vs. Choice Hotels International | InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. Wyndham Hotels Resorts |
| Shangri-La Asia vs. Hilton Worldwide Holdings | Shangri-La Asia vs. Hyatt Hotels | Shangri-La Asia vs. Wyndham Hotels Resorts | Shangri-La Asia vs. Choice Hotels International |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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