Correlation Between NORTHEAST UTILITIES and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES and PPHE HOTEL 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 NORTHEAST UTILITIES and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and PPHE HOTEL GROUP, you can compare the effects of market volatilities on NORTHEAST UTILITIES and PPHE HOTEL 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 NORTHEAST UTILITIES with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and PPHE HOTEL.
Diversification Opportunities for NORTHEAST UTILITIES and PPHE HOTEL
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NORTHEAST and PPHE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and PPHE HOTEL go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and PPHE HOTEL
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to under-perform the PPHE HOTEL. But the stock apears to be less risky and, when comparing its historical volatility, NORTHEAST UTILITIES is 1.34 times less risky than PPHE HOTEL. The stock trades about -0.15 of its potential returns per unit of risk. The PPHE HOTEL GROUP is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,380 in PPHE HOTEL GROUP on September 20, 2024 and sell it today you would earn a total of 210.00 from holding PPHE HOTEL GROUP or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| PPHE HOTEL GROUP |
NORTHEAST UTILITIES and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and PPHE HOTEL
The main advantage of trading using opposite NORTHEAST UTILITIES and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES position performs unexpectedly, PPHE HOTEL 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.| NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Microsoft |
| PPHE HOTEL vs. NORTHEAST UTILITIES | PPHE HOTEL vs. LG Display Co | PPHE HOTEL vs. ELMOS SEMICONDUCTOR | PPHE HOTEL vs. MagnaChip Semiconductor Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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