Correlation Between TAL Education and Host Hotels
Can any of the company-specific risk be diversified away by investing in both TAL Education and Host Hotels 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 TAL Education and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and Host Hotels Resorts, you can compare the effects of market volatilities on TAL Education and Host Hotels 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 TAL Education with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Host Hotels.
Diversification Opportunities for TAL Education and Host Hotels
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TAL and Host is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and TAL Education 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 TAL Education Group are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of TAL Education i.e., TAL Education and Host Hotels go up and down completely randomly.
Pair Corralation between TAL Education and Host Hotels
Assuming the 90 days trading horizon TAL Education Group is expected to generate 2.73 times more return on investment than Host Hotels. However, TAL Education is 2.73 times more volatile than Host Hotels Resorts. It trades about 0.05 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.01 per unit of risk. If you would invest 528.00 in TAL Education Group on August 25, 2024 and sell it today you would earn a total of 397.00 from holding TAL Education Group or generate 75.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Host Hotels Resorts
Performance |
| Timeline |
| TAL Education Group |
| Host Hotels Resorts |
TAL Education and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Host Hotels
The main advantage of trading using opposite TAL Education and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| TAL Education vs. Host Hotels Resorts | TAL Education vs. MELIA HOTELS | TAL Education vs. EAT WELL INVESTMENT | TAL Education vs. PennantPark Investment |
| Host Hotels vs. Lion One Metals | Host Hotels vs. ATRESMEDIA | Host Hotels vs. American Eagle Outfitters | Host Hotels vs. Live Nation Entertainment |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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