Correlation Between NH HOTEL and NIGHTINGALE HEALTH
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and NIGHTINGALE HEALTH 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 NH HOTEL and NIGHTINGALE HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH HOTEL GROUP and NIGHTINGALE HEALTH EO, you can compare the effects of market volatilities on NH HOTEL and NIGHTINGALE HEALTH 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 NH HOTEL with a short position of NIGHTINGALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and NIGHTINGALE HEALTH.
Diversification Opportunities for NH HOTEL and NIGHTINGALE HEALTH
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NH5 and NIGHTINGALE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and NIGHTINGALE HEALTH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIGHTINGALE HEALTH and NH HOTEL 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 NH HOTEL GROUP are associated (or correlated) with NIGHTINGALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIGHTINGALE HEALTH has no effect on the direction of NH HOTEL i.e., NH HOTEL and NIGHTINGALE HEALTH go up and down completely randomly.
Pair Corralation between NH HOTEL and NIGHTINGALE HEALTH
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 0.19 times more return on investment than NIGHTINGALE HEALTH. However, NH HOTEL GROUP is 5.27 times less risky than NIGHTINGALE HEALTH. It trades about -0.01 of its potential returns per unit of risk. NIGHTINGALE HEALTH EO is currently generating about -0.01 per unit of risk. If you would invest 625.00 in NH HOTEL GROUP on November 7, 2024 and sell it today you would lose (1.00) from holding NH HOTEL GROUP or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. NIGHTINGALE HEALTH EO
Performance |
| Timeline |
| NH HOTEL GROUP |
| NIGHTINGALE HEALTH |
NH HOTEL and NIGHTINGALE HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and NIGHTINGALE HEALTH
The main advantage of trading using opposite NH HOTEL and NIGHTINGALE HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH will offset losses from the drop in NIGHTINGALE HEALTH's long position.The idea behind NH HOTEL GROUP and NIGHTINGALE HEALTH EO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NIGHTINGALE HEALTH vs. British American Tobacco | NIGHTINGALE HEALTH vs. WT OFFSHORE | NIGHTINGALE HEALTH vs. GMO Internet | NIGHTINGALE HEALTH vs. SBM OFFSHORE |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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