Correlation Between PERENNIAL ENERGY and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both PERENNIAL ENERGY and NH 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 PERENNIAL ENERGY and NH HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PERENNIAL ENERGY HD 01 and NH HOTEL GROUP, you can compare the effects of market volatilities on PERENNIAL ENERGY and NH 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 PERENNIAL ENERGY with a short position of NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PERENNIAL ENERGY and NH HOTEL.
Diversification Opportunities for PERENNIAL ENERGY and NH HOTEL
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between PERENNIAL and NH5 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PERENNIAL ENERGY HD 01 and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP and PERENNIAL ENERGY 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 PERENNIAL ENERGY HD 01 are associated (or correlated) with NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of PERENNIAL ENERGY i.e., PERENNIAL ENERGY and NH HOTEL go up and down completely randomly.
Pair Corralation between PERENNIAL ENERGY and NH HOTEL
Assuming the 90 days horizon PERENNIAL ENERGY HD 01 is expected to generate 1.29 times more return on investment than NH HOTEL. However, PERENNIAL ENERGY is 1.29 times more volatile than NH HOTEL GROUP. It trades about 0.02 of its potential returns per unit of risk. NH HOTEL GROUP is currently generating about -0.01 per unit of risk. If you would invest 12.00 in PERENNIAL ENERGY HD 01 on September 3, 2024 and sell it today you would earn a total of 0.00 from holding PERENNIAL ENERGY HD 01 or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PERENNIAL ENERGY HD 01 vs. NH HOTEL GROUP
Performance |
| Timeline |
| PERENNIAL ENERGY |
| NH HOTEL GROUP |
PERENNIAL ENERGY and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PERENNIAL ENERGY and NH HOTEL
The main advantage of trading using opposite PERENNIAL ENERGY and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PERENNIAL ENERGY position performs unexpectedly, NH 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 NH HOTEL will offset losses from the drop in NH HOTEL's long position.| PERENNIAL ENERGY vs. NH HOTEL GROUP | PERENNIAL ENERGY vs. GOLD ROAD RES | PERENNIAL ENERGY vs. MHP Hotel AG | PERENNIAL ENERGY vs. Air Transport Services |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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