Correlation Between InterContinental and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and PPHE Hotel 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 PPHE Hotel Group, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and PPHE Hotel.
Diversification Opportunities for InterContinental and PPHE Hotel
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between InterContinental and PPHE is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 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 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 InterContinental i.e., InterContinental and PPHE Hotel go up and down completely randomly.
Pair Corralation between InterContinental and PPHE Hotel
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.98 times more return on investment than PPHE Hotel. However, InterContinental Hotels Group is 1.02 times less risky than PPHE Hotel. It trades about 0.39 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about -0.02 per unit of risk. If you would invest 857,800 in InterContinental Hotels Group on August 24, 2024 and sell it today you would earn a total of 106,600 from holding InterContinental Hotels Group or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. PPHE Hotel Group
Performance |
| Timeline |
| InterContinental Hotels |
| PPHE Hotel Group |
InterContinental and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and PPHE Hotel
The main advantage of trading using opposite InterContinental and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.| InterContinental vs. Toyota Motor Corp | InterContinental vs. SoftBank Group Corp | InterContinental vs. State Bank of | InterContinental vs. Freddie Mac |
| PPHE Hotel vs. Toyota Motor Corp | PPHE Hotel vs. SoftBank Group Corp | PPHE Hotel vs. State Bank of | PPHE Hotel vs. Freddie Mac |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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