Correlation Between NH Hoteles and Grupo Ezentis

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Can any of the company-specific risk be diversified away by investing in both NH Hoteles and Grupo Ezentis 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 Hoteles and Grupo Ezentis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Hoteles and Grupo Ezentis SA, you can compare the effects of market volatilities on NH Hoteles and Grupo Ezentis 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 Hoteles with a short position of Grupo Ezentis. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Hoteles and Grupo Ezentis.

Diversification Opportunities for NH Hoteles and Grupo Ezentis

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between NHH and Grupo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NH Hoteles and Grupo Ezentis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Ezentis SA and NH Hoteles 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 Hoteles are associated (or correlated) with Grupo Ezentis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Ezentis SA has no effect on the direction of NH Hoteles i.e., NH Hoteles and Grupo Ezentis go up and down completely randomly.

Pair Corralation between NH Hoteles and Grupo Ezentis

Assuming the 90 days trading horizon NH Hoteles is expected to generate 1.17 times less return on investment than Grupo Ezentis. But when comparing it to its historical volatility, NH Hoteles is 3.76 times less risky than Grupo Ezentis. It trades about 0.08 of its potential returns per unit of risk. Grupo Ezentis SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Grupo Ezentis SA on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Grupo Ezentis SA or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

NH Hoteles  vs.  Grupo Ezentis SA

 Performance 
       Timeline  
NH Hoteles 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NH Hoteles are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, NH Hoteles may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Grupo Ezentis SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Ezentis SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NH Hoteles and Grupo Ezentis Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NH Hoteles and Grupo Ezentis

The main advantage of trading using opposite NH Hoteles and Grupo Ezentis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Hoteles position performs unexpectedly, Grupo Ezentis 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 Grupo Ezentis will offset losses from the drop in Grupo Ezentis' long position.
The idea behind NH Hoteles and Grupo Ezentis SA 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.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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