Correlation Between CANADA RARE and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both CANADA RARE 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 CANADA RARE and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CANADA RARE EARTH and PPHE HOTEL GROUP, you can compare the effects of market volatilities on CANADA RARE 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 CANADA RARE with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANADA RARE and PPHE HOTEL.
Diversification Opportunities for CANADA RARE and PPHE HOTEL
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CANADA and PPHE is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CANADA RARE EARTH 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 CANADA RARE 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 CANADA RARE EARTH 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 CANADA RARE i.e., CANADA RARE and PPHE HOTEL go up and down completely randomly.
Pair Corralation between CANADA RARE and PPHE HOTEL
Assuming the 90 days trading horizon CANADA RARE EARTH is expected to generate 0.42 times more return on investment than PPHE HOTEL. However, CANADA RARE EARTH is 2.4 times less risky than PPHE HOTEL. It trades about -0.21 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about -0.18 per unit of risk. If you would invest 1.20 in CANADA RARE EARTH on November 3, 2024 and sell it today you would lose (0.05) from holding CANADA RARE EARTH or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CANADA RARE EARTH vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| CANADA RARE EARTH |
| PPHE HOTEL GROUP |
CANADA RARE and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CANADA RARE and PPHE HOTEL
The main advantage of trading using opposite CANADA RARE and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CANADA RARE 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.| CANADA RARE vs. InPlay Oil Corp | CANADA RARE vs. PLAYWAY SA ZY 10 | CANADA RARE vs. TRAVEL LEISURE DL 01 | CANADA RARE vs. Insurance Australia Group |
| PPHE HOTEL vs. Haier Smart Home | PPHE HOTEL vs. OFFICE DEPOT | PPHE HOTEL vs. GREENX METALS LTD | PPHE HOTEL vs. De Grey Mining |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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