Correlation Between NH HOTEL and PC Connection
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and PC Connection 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 PC Connection 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 PC Connection, you can compare the effects of market volatilities on NH HOTEL and PC Connection 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 PC Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and PC Connection.
Diversification Opportunities for NH HOTEL and PC Connection
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NH5 and PCC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and PC Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PC Connection 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 PC Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PC Connection has no effect on the direction of NH HOTEL i.e., NH HOTEL and PC Connection go up and down completely randomly.
Pair Corralation between NH HOTEL and PC Connection
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 1.83 times more return on investment than PC Connection. However, NH HOTEL is 1.83 times more volatile than PC Connection. It trades about 0.05 of its potential returns per unit of risk. PC Connection is currently generating about 0.06 per unit of risk. If you would invest 361.00 in NH HOTEL GROUP on December 4, 2024 and sell it today you would earn a total of 267.00 from holding NH HOTEL GROUP or generate 73.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NH HOTEL GROUP vs. PC Connection
Performance |
| Timeline |
| NH HOTEL GROUP |
| PC Connection |
NH HOTEL and PC Connection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and PC Connection
The main advantage of trading using opposite NH HOTEL and PC Connection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, PC Connection 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 PC Connection will offset losses from the drop in PC Connection's long position.| NH HOTEL vs. Renesas Electronics | NH HOTEL vs. Electronic Arts | NH HOTEL vs. Methode Electronics | NH HOTEL vs. COSTCO WHOLESALE CDR |
| PC Connection vs. Telecom Argentina SA | PC Connection vs. The Hanover Insurance | PC Connection vs. COMBA TELECOM SYST | PC Connection vs. Entravision Communications |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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