Correlation Between Hotel Majestic and X Fab
Can any of the company-specific risk be diversified away by investing in both Hotel Majestic and X Fab 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 X Fab 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 X Fab Silicon, you can compare the effects of market volatilities on Hotel Majestic and X Fab 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 X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Majestic and X Fab.
Diversification Opportunities for Hotel Majestic and X Fab
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hotel and XFAB is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Majestic Cannes and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of Hotel Majestic i.e., Hotel Majestic and X Fab go up and down completely randomly.
Pair Corralation between Hotel Majestic and X Fab
Assuming the 90 days trading horizon Hotel Majestic Cannes is expected to generate 0.75 times more return on investment than X Fab. However, Hotel Majestic Cannes is 1.33 times less risky than X Fab. It trades about -0.01 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.11 per unit of risk. If you would invest 545,000 in Hotel Majestic Cannes on August 29, 2024 and sell it today you would lose (25,000) from holding Hotel Majestic Cannes or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Majestic Cannes vs. X Fab Silicon
Performance |
| Timeline |
| Hotel Majestic Cannes |
| X Fab Silicon |
Hotel Majestic and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Majestic and X Fab
The main advantage of trading using opposite Hotel Majestic and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Majestic position performs unexpectedly, X Fab 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 X Fab will offset losses from the drop in X Fab's long position.| Hotel Majestic vs. Accor S A | Hotel Majestic vs. Ferm Casino Mun | Hotel Majestic vs. Les Hotels Bav | Hotel Majestic 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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