Correlation Between NH Hotel and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both NH Hotel and Aluminumof China 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 Aluminumof China 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 Aluminum of, you can compare the effects of market volatilities on NH Hotel and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Hotel and Aluminumof China.
Diversification Opportunities for NH Hotel and Aluminumof China
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NHHEF and Aluminumof is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NH Hotel Group and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of NH Hotel i.e., NH Hotel and Aluminumof China go up and down completely randomly.
Pair Corralation between NH Hotel and Aluminumof China
If you would invest 540.00 in NH Hotel Group on November 30, 2024 and sell it today you would earn a total of 0.00 from holding NH Hotel Group or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NH Hotel Group vs. Aluminum of
Performance |
Timeline |
NH Hotel Group |
Aluminumof China |
NH Hotel and Aluminumof China Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NH Hotel and Aluminumof China
The main advantage of trading using opposite NH Hotel and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Hotel position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.NH Hotel vs. Crombie Real Estate | ||
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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