Correlation Between Hoteles Bestprice and Ferm Casino
Can any of the company-specific risk be diversified away by investing in both Hoteles Bestprice and Ferm Casino 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 Ferm Casino 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 Ferm Casino Mun, you can compare the effects of market volatilities on Hoteles Bestprice and Ferm Casino 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 Ferm Casino. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoteles Bestprice and Ferm Casino.
Diversification Opportunities for Hoteles Bestprice and Ferm Casino
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hoteles and Ferm is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles Bestprice SA and Ferm Casino Mun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferm Casino Mun 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 Ferm Casino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferm Casino Mun has no effect on the direction of Hoteles Bestprice i.e., Hoteles Bestprice and Ferm Casino go up and down completely randomly.
Pair Corralation between Hoteles Bestprice and Ferm Casino
Assuming the 90 days trading horizon Hoteles Bestprice SA is expected to generate 1.49 times more return on investment than Ferm Casino. However, Hoteles Bestprice is 1.49 times more volatile than Ferm Casino Mun. It trades about 0.06 of its potential returns per unit of risk. Ferm Casino Mun is currently generating about 0.02 per unit of risk. If you would invest 170.00 in Hoteles Bestprice SA on August 30, 2024 and sell it today you would earn a total of 130.00 from holding Hoteles Bestprice SA or generate 76.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.81% |
| Values | Daily Returns |
Hoteles Bestprice SA vs. Ferm Casino Mun
Performance |
| Timeline |
| Hoteles Bestprice |
| Ferm Casino Mun |
Hoteles Bestprice and Ferm Casino Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hoteles Bestprice and Ferm Casino
The main advantage of trading using opposite Hoteles Bestprice and Ferm Casino positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoteles Bestprice position performs unexpectedly, Ferm Casino 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 Ferm Casino will offset losses from the drop in Ferm Casino's long position.| Hoteles Bestprice vs. Accor S A | Hoteles Bestprice vs. Ferm Casino Mun | Hoteles Bestprice vs. Les Hotels Bav | Hoteles Bestprice vs. Hotelim Socit Anonyme |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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