Correlation Between Oron Group and Netz Hotels
Can any of the company-specific risk be diversified away by investing in both Oron Group and Netz Hotels 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 Oron Group and Netz Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oron Group Investments and Netz Hotels, you can compare the effects of market volatilities on Oron Group and Netz Hotels 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 Oron Group with a short position of Netz Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oron Group and Netz Hotels.
Diversification Opportunities for Oron Group and Netz Hotels
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oron and Netz is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Oron Group Investments and Netz Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netz Hotels and Oron Group 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 Oron Group Investments are associated (or correlated) with Netz Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netz Hotels has no effect on the direction of Oron Group i.e., Oron Group and Netz Hotels go up and down completely randomly.
Pair Corralation between Oron Group and Netz Hotels
Assuming the 90 days trading horizon Oron Group is expected to generate 1.68 times less return on investment than Netz Hotels. But when comparing it to its historical volatility, Oron Group Investments is 2.83 times less risky than Netz Hotels. It trades about 0.03 of its potential returns per unit of risk. Netz Hotels is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Netz Hotels on August 29, 2024 and sell it today you would lose (1,590) from holding Netz Hotels or give up 31.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oron Group Investments vs. Netz Hotels
Performance |
| Timeline |
| Oron Group Investments |
| Netz Hotels |
Oron Group and Netz Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oron Group and Netz Hotels
The main advantage of trading using opposite Oron Group and Netz Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oron Group position performs unexpectedly, Netz Hotels 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 Netz Hotels will offset losses from the drop in Netz Hotels' long position.| Oron Group vs. Ormat Technologies | Oron Group vs. Multi Retail Group | Oron Group vs. Nova | Oron Group vs. B Communications |
| Netz Hotels vs. Direct Capital Investments | Netz Hotels vs. Itay Financial AA | Netz Hotels vs. B Communications | Netz Hotels vs. Holmes Place International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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