Correlation Between K2 Asset and Hotel Property
Can any of the company-specific risk be diversified away by investing in both K2 Asset and Hotel Property 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 K2 Asset and Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and Hotel Property Investments, you can compare the effects of market volatilities on K2 Asset and Hotel Property 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 K2 Asset with a short position of Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Hotel Property.
Diversification Opportunities for K2 Asset and Hotel Property
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KAM and Hotel is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Hotel Property Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Property Inves and K2 Asset 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 K2 Asset Management are associated (or correlated) with Hotel Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Property Inves has no effect on the direction of K2 Asset i.e., K2 Asset and Hotel Property go up and down completely randomly.
Pair Corralation between K2 Asset and Hotel Property
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 4.56 times more return on investment than Hotel Property. However, K2 Asset is 4.56 times more volatile than Hotel Property Investments. It trades about 0.06 of its potential returns per unit of risk. Hotel Property Investments is currently generating about 0.08 per unit of risk. If you would invest 5.00 in K2 Asset Management on September 3, 2024 and sell it today you would earn a total of 2.00 from holding K2 Asset Management or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. Hotel Property Investments
Performance |
| Timeline |
| K2 Asset Management |
| Hotel Property Inves |
K2 Asset and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Hotel Property
The main advantage of trading using opposite K2 Asset and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, Hotel Property 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 Hotel Property will offset losses from the drop in Hotel Property's long position.The idea behind K2 Asset Management and Hotel Property Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hotel Property vs. Charter Hall Retail | Hotel Property vs. GDI Property Group | Hotel Property vs. Champion Iron | Hotel Property vs. iShares Global Healthcare |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |