Correlation Between Hoteles Bestprice and Diagnostic Medical
Can any of the company-specific risk be diversified away by investing in both Hoteles Bestprice and Diagnostic Medical 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 Hoteles Bestprice and Diagnostic Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hoteles Bestprice SA and Diagnostic Medical Systems, you can compare the effects of market volatilities on Hoteles Bestprice and Diagnostic Medical 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 Hoteles Bestprice with a short position of Diagnostic Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoteles Bestprice and Diagnostic Medical.
Diversification Opportunities for Hoteles Bestprice and Diagnostic Medical
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hoteles and Diagnostic is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles Bestprice SA and Diagnostic Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diagnostic Medical and Hoteles Bestprice 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 Hoteles Bestprice SA are associated (or correlated) with Diagnostic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diagnostic Medical has no effect on the direction of Hoteles Bestprice i.e., Hoteles Bestprice and Diagnostic Medical go up and down completely randomly.
Pair Corralation between Hoteles Bestprice and Diagnostic Medical
Assuming the 90 days trading horizon Hoteles Bestprice SA is expected to under-perform the Diagnostic Medical. But the stock apears to be less risky and, when comparing its historical volatility, Hoteles Bestprice SA is 1.45 times less risky than Diagnostic Medical. The stock trades about -0.24 of its potential returns per unit of risk. The Diagnostic Medical Systems is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Diagnostic Medical Systems on September 1, 2024 and sell it today you would lose (8.00) from holding Diagnostic Medical Systems or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hoteles Bestprice SA vs. Diagnostic Medical Systems
Performance |
| Timeline |
| Hoteles Bestprice |
| Diagnostic Medical |
Hoteles Bestprice and Diagnostic Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hoteles Bestprice and Diagnostic Medical
The main advantage of trading using opposite Hoteles Bestprice and Diagnostic Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoteles Bestprice position performs unexpectedly, Diagnostic Medical 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 Diagnostic Medical will offset losses from the drop in Diagnostic Medical's long position.| Hoteles Bestprice vs. Les Hotels Bav | Hoteles Bestprice vs. Groupe Partouche SA | Hoteles Bestprice vs. Centrale dAchat Franaise | Hoteles Bestprice vs. Manitou BF SA |
| Diagnostic Medical vs. CMG Cleantech SA | Diagnostic Medical vs. Axway Software | Diagnostic Medical vs. Reworld Media | Diagnostic Medical vs. Hoteles Bestprice SA |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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