Correlation Between Hotel Majestic and Les Hotels
Can any of the company-specific risk be diversified away by investing in both Hotel Majestic and Les 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 Hotel Majestic and Les Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Majestic Cannes and Les Hotels Bav, you can compare the effects of market volatilities on Hotel Majestic and Les 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 Hotel Majestic with a short position of Les Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Majestic and Les Hotels.
Diversification Opportunities for Hotel Majestic and Les Hotels
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hotel and Les is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Majestic Cannes and Les Hotels Bav in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Hotels Bav and Hotel Majestic 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 Hotel Majestic Cannes are associated (or correlated) with Les Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Hotels Bav has no effect on the direction of Hotel Majestic i.e., Hotel Majestic and Les Hotels go up and down completely randomly.
Pair Corralation between Hotel Majestic and Les Hotels
Assuming the 90 days trading horizon Hotel Majestic Cannes is expected to generate 1.15 times more return on investment than Les Hotels. However, Hotel Majestic is 1.15 times more volatile than Les Hotels Bav. It trades about 0.04 of its potential returns per unit of risk. Les Hotels Bav is currently generating about 0.04 per unit of risk. If you would invest 420,000 in Hotel Majestic Cannes on September 12, 2024 and sell it today you would earn a total of 100,000 from holding Hotel Majestic Cannes or generate 23.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.21% |
| Values | Daily Returns |
Hotel Majestic Cannes vs. Les Hotels Bav
Performance |
| Timeline |
| Hotel Majestic Cannes |
| Les Hotels Bav |
Hotel Majestic and Les Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Majestic and Les Hotels
The main advantage of trading using opposite Hotel Majestic and Les Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Majestic position performs unexpectedly, Les 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 Les Hotels will offset losses from the drop in Les Hotels' long position.| Hotel Majestic vs. Les Hotels Bav | Hotel Majestic vs. Groupe Partouche SA | Hotel Majestic vs. Centrale dAchat Franaise | Hotel Majestic vs. Manitou BF SA |
| Les Hotels vs. SA Catana Group | Les Hotels vs. Verallia | Les Hotels vs. Thermador Groupe SA | Les Hotels vs. Maisons du Monde |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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