Correlation Between Paramount Communications and Oriental Hotels
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By analyzing existing cross correlation between Paramount Communications Limited and Oriental Hotels Limited, you can compare the effects of market volatilities on Paramount Communications and Oriental 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 Paramount Communications with a short position of Oriental Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Communications and Oriental Hotels.
Diversification Opportunities for Paramount Communications and Oriental Hotels
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Paramount and Oriental is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Communications Limit and Oriental Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Hotels and Paramount Communications 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 Paramount Communications Limited are associated (or correlated) with Oriental Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Hotels has no effect on the direction of Paramount Communications i.e., Paramount Communications and Oriental Hotels go up and down completely randomly.
Pair Corralation between Paramount Communications and Oriental Hotels
Assuming the 90 days trading horizon Paramount Communications Limited is expected to under-perform the Oriental Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Paramount Communications Limited is 1.01 times less risky than Oriental Hotels. The stock trades about -0.09 of its potential returns per unit of risk. The Oriental Hotels Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 16,844 in Oriental Hotels Limited on October 18, 2024 and sell it today you would earn a total of 708.00 from holding Oriental Hotels Limited or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Communications Limit vs. Oriental Hotels Limited
Performance |
| Timeline |
| Paramount Communications |
| Oriental Hotels |
Paramount Communications and Oriental Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Communications and Oriental Hotels
The main advantage of trading using opposite Paramount Communications and Oriental Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Communications position performs unexpectedly, Oriental 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 Oriental Hotels will offset losses from the drop in Oriental Hotels' long position.The idea behind Paramount Communications Limited and Oriental Hotels Limited 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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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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