Correlation Between NH Hotel and Aluminumof China

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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

NHHEFAluminumofDiversified AwayNHHEFAluminumofDiversified Away100%
-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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NH Hotel Group  vs.  Aluminum of

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-100102030
JavaScript chart by amCharts 3.21.15NHHEF ALMMF
       Timeline  
NH Hotel Group 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in NH Hotel Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, NH Hotel reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb44.24.44.64.855.25.4
Aluminumof China 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Aluminum of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Aluminumof China may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.550.60.650.7

NH Hotel and Aluminumof China Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-14.62-10.95-7.28-3.610.03.777.6811.5815.4819.39 0.0140.0160.0180.020
JavaScript chart by amCharts 3.21.15NHHEF ALMMF
       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.
The idea behind NH Hotel Group and Aluminum of 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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