Correlation Between ITOCHU and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both ITOCHU 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 ITOCHU and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITOCHU and PPHE HOTEL GROUP, you can compare the effects of market volatilities on ITOCHU 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 ITOCHU with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITOCHU and PPHE HOTEL.
Diversification Opportunities for ITOCHU and PPHE HOTEL
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between ITOCHU and PPHE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ITOCHU 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 ITOCHU 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 ITOCHU 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 ITOCHU i.e., ITOCHU and PPHE HOTEL go up and down completely randomly.
Pair Corralation between ITOCHU and PPHE HOTEL
Assuming the 90 days horizon ITOCHU is expected to generate 1.0 times more return on investment than PPHE HOTEL. However, ITOCHU is 1.0 times less risky than PPHE HOTEL. It trades about 0.06 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.03 per unit of risk. If you would invest 2,991 in ITOCHU on September 14, 2024 and sell it today you would earn a total of 1,860 from holding ITOCHU or generate 62.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITOCHU vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| ITOCHU |
| PPHE HOTEL GROUP |
ITOCHU and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITOCHU and PPHE HOTEL
The main advantage of trading using opposite ITOCHU and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITOCHU 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.| ITOCHU vs. PPHE HOTEL GROUP | ITOCHU vs. Wyndham Hotels Resorts | ITOCHU vs. Vastned Retail NV | ITOCHU vs. Summit Hotel Properties |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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