Correlation Between LuxUrban Hotels and Huazhu
Can any of the company-specific risk be diversified away by investing in both LuxUrban Hotels and Huazhu 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 LuxUrban Hotels and Huazhu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LuxUrban Hotels and Huazhu Group, you can compare the effects of market volatilities on LuxUrban Hotels and Huazhu 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 LuxUrban Hotels with a short position of Huazhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Huazhu.
Diversification Opportunities for LuxUrban Hotels and Huazhu
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LuxUrban and Huazhu is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels and Huazhu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huazhu Group and LuxUrban Hotels 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 LuxUrban Hotels are associated (or correlated) with Huazhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huazhu Group has no effect on the direction of LuxUrban Hotels i.e., LuxUrban Hotels and Huazhu go up and down completely randomly.
Pair Corralation between LuxUrban Hotels and Huazhu
Given the investment horizon of 90 days LuxUrban Hotels is expected to under-perform the Huazhu. In addition to that, LuxUrban Hotels is 5.85 times more volatile than Huazhu Group. It trades about -0.51 of its total potential returns per unit of risk. Huazhu Group is currently generating about 0.06 per unit of volatility. If you would invest 3,258 in Huazhu Group on November 2, 2024 and sell it today you would earn a total of 83.00 from holding Huazhu Group or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 63.16% |
| Values | Daily Returns |
LuxUrban Hotels vs. Huazhu Group
Performance |
| Timeline |
| LuxUrban Hotels |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Huazhu Group |
LuxUrban Hotels and Huazhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LuxUrban Hotels and Huazhu
The main advantage of trading using opposite LuxUrban Hotels and Huazhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LuxUrban Hotels position performs unexpectedly, Huazhu 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 Huazhu will offset losses from the drop in Huazhu's long position.| LuxUrban Hotels vs. GreenTree Hospitality Group | LuxUrban Hotels vs. InterContinental Hotels Group | LuxUrban Hotels vs. Atour Lifestyle Holdings | LuxUrban Hotels vs. Huazhu Group |
| Huazhu vs. GreenTree Hospitality Group | Huazhu vs. Soho House Co | Huazhu vs. InterContinental Hotels Group | Huazhu vs. The Intergroup |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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