Correlation Between Japan Asia and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Japan Asia and Choice 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 Japan Asia and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and Choice Hotels International, you can compare the effects of market volatilities on Japan Asia and Choice 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 Japan Asia with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Choice Hotels.
Diversification Opportunities for Japan Asia and Choice Hotels
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Choice is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and Japan Asia 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 Japan Asia Investment are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Japan Asia i.e., Japan Asia and Choice Hotels go up and down completely randomly.
Pair Corralation between Japan Asia and Choice Hotels
Assuming the 90 days horizon Japan Asia is expected to generate 4.46 times less return on investment than Choice Hotels. In addition to that, Japan Asia is 1.82 times more volatile than Choice Hotels International. It trades about 0.0 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.03 per unit of volatility. If you would invest 11,165 in Choice Hotels International on October 26, 2024 and sell it today you would earn a total of 2,535 from holding Choice Hotels International or generate 22.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Asia Investment vs. Choice Hotels International
Performance |
| Timeline |
| Japan Asia Investment |
| Choice Hotels Intern |
Japan Asia and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Choice Hotels
The main advantage of trading using opposite Japan Asia and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia position performs unexpectedly, Choice 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| Japan Asia vs. Blackstone Group | Japan Asia vs. The Bank of | Japan Asia vs. Ameriprise Financial | Japan Asia vs. State Street |
| Choice Hotels vs. Chengdu PUTIAN Telecommunications | Choice Hotels vs. Iridium Communications | Choice Hotels vs. THAI BEVERAGE | Choice Hotels vs. Zoom Video Communications |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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