Correlation Between L1 Long and Hotel Property
Can any of the company-specific risk be diversified away by investing in both L1 Long 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 L1 Long and Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L1 Long Short and Hotel Property Investments, you can compare the effects of market volatilities on L1 Long 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 L1 Long with a short position of Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of L1 Long and Hotel Property.
Diversification Opportunities for L1 Long and Hotel Property
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LSF and Hotel is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding L1 Long Short 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 L1 Long 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 L1 Long Short 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 L1 Long i.e., L1 Long and Hotel Property go up and down completely randomly.
Pair Corralation between L1 Long and Hotel Property
Assuming the 90 days trading horizon L1 Long Short is expected to generate 0.79 times more return on investment than Hotel Property. However, L1 Long Short is 1.27 times less risky than Hotel Property. It trades about 0.04 of its potential returns per unit of risk. Hotel Property Investments is currently generating about 0.03 per unit of risk. If you would invest 246.00 in L1 Long Short on September 5, 2024 and sell it today you would earn a total of 61.00 from holding L1 Long Short or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
L1 Long Short vs. Hotel Property Investments
Performance |
| Timeline |
| L1 Long Short |
| Hotel Property Inves |
L1 Long and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L1 Long and Hotel Property
The main advantage of trading using opposite L1 Long and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L1 Long 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.| L1 Long vs. Regal Funds Management | L1 Long vs. Chalice Mining Limited | L1 Long vs. Hotel Property Investments | L1 Long vs. Aspire Mining |
| Hotel Property vs. Scentre Group | Hotel Property vs. Vicinity Centres Re | Hotel Property vs. Charter Hall Retail | Hotel Property vs. Carindale Property Trust |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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