Correlation Between AMA Group and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both AMA Group 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 AMA Group and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMA Group Limited and Choice Hotels International, you can compare the effects of market volatilities on AMA Group 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 AMA Group with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMA Group and Choice Hotels.
Diversification Opportunities for AMA Group and Choice Hotels
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMA and Choice is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding AMA Group Limited 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 AMA Group 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 AMA Group Limited 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 AMA Group i.e., AMA Group and Choice Hotels go up and down completely randomly.
Pair Corralation between AMA Group and Choice Hotels
Assuming the 90 days horizon AMA Group Limited is expected to under-perform the Choice Hotels. In addition to that, AMA Group is 2.36 times more volatile than Choice Hotels International. It trades about -0.02 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.29 per unit of volatility. If you would invest 12,800 in Choice Hotels International on August 31, 2024 and sell it today you would earn a total of 1,300 from holding Choice Hotels International or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMA Group Limited vs. Choice Hotels International
Performance |
| Timeline |
| AMA Group Limited |
| Choice Hotels Intern |
AMA Group and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMA Group and Choice Hotels
The main advantage of trading using opposite AMA Group and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMA Group 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.| AMA Group vs. Choice Hotels International | AMA Group vs. SYSTEMAIR AB | AMA Group vs. Westinghouse Air Brake | AMA Group vs. Host Hotels Resorts |
| Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. ACCOR SPADR NEW |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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