Correlation Between NH HOTEL and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both NH HOTEL and Sanyo Chemical 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 Sanyo Chemical 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on NH HOTEL and Sanyo Chemical 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Sanyo Chemical.
Diversification Opportunities for NH HOTEL and Sanyo Chemical
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NH5 and Sanyo is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of NH HOTEL i.e., NH HOTEL and Sanyo Chemical go up and down completely randomly.
Pair Corralation between NH HOTEL and Sanyo Chemical
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 2.55 times more return on investment than Sanyo Chemical. However, NH HOTEL is 2.55 times more volatile than Sanyo Chemical Industries. It trades about 0.05 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.02 per unit of risk. If you would invest 379.00 in NH HOTEL GROUP on October 19, 2024 and sell it today you would earn a total of 245.00 from holding NH HOTEL GROUP or generate 64.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. Sanyo Chemical Industries
Performance |
| Timeline |
| NH HOTEL GROUP |
| Sanyo Chemical Industries |
NH HOTEL and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Sanyo Chemical
The main advantage of trading using opposite NH HOTEL and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL position performs unexpectedly, Sanyo Chemical 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.| NH HOTEL vs. CN MODERN DAIRY | NH HOTEL vs. American Airlines Group | NH HOTEL vs. PLANT VEDA FOODS | NH HOTEL vs. EBRO FOODS |
| Sanyo Chemical vs. TRAVEL LEISURE DL 01 | Sanyo Chemical vs. SINGAPORE AIRLINES | Sanyo Chemical vs. PLAYWAY SA ZY 10 | Sanyo Chemical vs. Playtech plc |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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