Correlation Between Industrial and Booking Holdings
Can any of the company-specific risk be diversified away by investing in both Industrial and Booking Holdings 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 Industrial and Booking Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial and Commercial and Booking Holdings, you can compare the effects of market volatilities on Industrial and Booking Holdings 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 Industrial with a short position of Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and Booking Holdings.
Diversification Opportunities for Industrial and Booking Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrial and Booking is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and Industrial 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 Industrial and Commercial are associated (or correlated) with Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of Industrial i.e., Industrial and Booking Holdings go up and down completely randomly.
Pair Corralation between Industrial and Booking Holdings
Assuming the 90 days horizon Industrial is expected to generate 5.6 times less return on investment than Booking Holdings. In addition to that, Industrial is 1.12 times more volatile than Booking Holdings. It trades about 0.08 of its total potential returns per unit of risk. Booking Holdings is currently generating about 0.53 per unit of volatility. If you would invest 397,700 in Booking Holdings on August 24, 2024 and sell it today you would earn a total of 94,600 from holding Booking Holdings or generate 23.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial and Commercial vs. Booking Holdings
Performance |
| Timeline |
| Industrial and Commercial |
| Booking Holdings |
Industrial and Booking Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial and Booking Holdings
The main advantage of trading using opposite Industrial and Booking Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial position performs unexpectedly, Booking Holdings 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 Booking Holdings will offset losses from the drop in Booking Holdings' long position.| Industrial vs. HK Electric Investments | Industrial vs. Postal Savings Bank | Industrial vs. Chuangs China Investments | Industrial vs. TITAN MACHINERY |
| Booking Holdings vs. ANTA Sports Products | Booking Holdings vs. Trip Group Limited | Booking Holdings vs. Expedia Group | Booking Holdings vs. Shimano |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |