Correlation Between NH HOTEL and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and Lifeway Foods 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 Lifeway Foods 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 Lifeway Foods, you can compare the effects of market volatilities on NH HOTEL and Lifeway Foods 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 Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Lifeway Foods.
Diversification Opportunities for NH HOTEL and Lifeway Foods
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NH5 and Lifeway is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of NH HOTEL i.e., NH HOTEL and Lifeway Foods go up and down completely randomly.
Pair Corralation between NH HOTEL and Lifeway Foods
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 0.48 times more return on investment than Lifeway Foods. However, NH HOTEL GROUP is 2.08 times less risky than Lifeway Foods. It trades about 0.06 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.02 per unit of risk. If you would invest 412.00 in NH HOTEL GROUP on August 29, 2024 and sell it today you would earn a total of 12.00 from holding NH HOTEL GROUP or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NH HOTEL GROUP vs. Lifeway Foods
Performance |
| Timeline |
| NH HOTEL GROUP |
| Lifeway Foods |
NH HOTEL and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Lifeway Foods
The main advantage of trading using opposite NH HOTEL and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| NH HOTEL vs. LEGACY IRON ORE | NH HOTEL vs. RELIANCE STEEL AL | NH HOTEL vs. LION ONE METALS | NH HOTEL vs. Japan Tobacco |
| Lifeway Foods vs. BE Semiconductor Industries | Lifeway Foods vs. Fast Retailing Co | Lifeway Foods vs. ELMOS SEMICONDUCTOR | Lifeway Foods vs. Carsales |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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