Correlation Between NH HOTEL and Halma Plc
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and Halma Plc 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 Halma Plc 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 Halma plc, you can compare the effects of market volatilities on NH HOTEL and Halma Plc 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 Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Halma Plc.
Diversification Opportunities for NH HOTEL and Halma Plc
Very weak diversification
The 3 months correlation between NH5 and Halma is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc 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 Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of NH HOTEL i.e., NH HOTEL and Halma Plc go up and down completely randomly.
Pair Corralation between NH HOTEL and Halma Plc
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 0.34 times more return on investment than Halma Plc. However, NH HOTEL GROUP is 2.92 times less risky than Halma Plc. It trades about 0.35 of its potential returns per unit of risk. Halma plc is currently generating about -0.1 per unit of risk. If you would invest 604.00 in NH HOTEL GROUP on October 17, 2024 and sell it today you would earn a total of 22.00 from holding NH HOTEL GROUP or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. Halma plc
Performance |
| Timeline |
| NH HOTEL GROUP |
| Halma plc |
NH HOTEL and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Halma Plc
The main advantage of trading using opposite NH HOTEL and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, Halma Plc 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 Halma Plc will offset losses from the drop in Halma Plc's long position.| NH HOTEL vs. TRAINLINE PLC LS | NH HOTEL vs. SILVER BULLET DATA | NH HOTEL vs. Alliance Data Systems | NH HOTEL vs. American Eagle Outfitters |
| Halma Plc vs. NH HOTEL GROUP | Halma Plc vs. Park Hotels Resorts | Halma Plc vs. Singapore Reinsurance | Halma Plc vs. The Hanover Insurance |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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