Correlation Between International Game and Huazhu
Can any of the company-specific risk be diversified away by investing in both International Game 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 International Game and Huazhu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Game Technology and Huazhu Group, you can compare the effects of market volatilities on International Game 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 International Game with a short position of Huazhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and Huazhu.
Diversification Opportunities for International Game and Huazhu
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Huazhu is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Huazhu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huazhu Group and International Game 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 International Game Technology 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 International Game i.e., International Game and Huazhu go up and down completely randomly.
Pair Corralation between International Game and Huazhu
Considering the 90-day investment horizon International Game Technology is expected to under-perform the Huazhu. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 2.46 times less risky than Huazhu. The stock trades about -0.15 of its potential returns per unit of risk. The Huazhu Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,044 in Huazhu Group on August 30, 2024 and sell it today you would earn a total of 159.00 from holding Huazhu Group or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Game Technology vs. Huazhu Group
Performance |
| Timeline |
| International Game |
| Huazhu Group |
International Game and Huazhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Game and Huazhu
The main advantage of trading using opposite International Game and Huazhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game 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.| International Game vs. Light Wonder | International Game vs. Everi Holdings | International Game vs. Inspired Entertainment | International Game vs. PlayAGS |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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