Correlation Between Primega Group and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Primega Group and Choice 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 Primega Group and Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primega Group Holdings and Choice Hotels International, you can compare the effects of market volatilities on Primega Group and Choice 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 Primega Group with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primega Group and Choice Hotels.
Diversification Opportunities for Primega Group and Choice Hotels
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Primega and Choice is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Primega Group Holdings and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and Primega 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 Primega Group Holdings are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Primega Group i.e., Primega Group and Choice Hotels go up and down completely randomly.
Pair Corralation between Primega Group and Choice Hotels
Given the investment horizon of 90 days Primega Group Holdings is expected to generate 185.17 times more return on investment than Choice Hotels. However, Primega Group is 185.17 times more volatile than Choice Hotels International. It trades about 0.2 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.36 per unit of risk. If you would invest 1,434 in Primega Group Holdings on September 1, 2024 and sell it today you would lose (1,196) from holding Primega Group Holdings or give up 83.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primega Group Holdings vs. Choice Hotels International
Performance |
| Timeline |
| Primega Group Holdings |
| Choice Hotels Intern |
Primega Group and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primega Group and Choice Hotels
The main advantage of trading using opposite Primega Group and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primega Group position performs unexpectedly, Choice 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| Primega Group vs. Braskem SA Class | Primega Group vs. Mativ Holdings | Primega Group vs. Eastman Chemical | Primega Group vs. Zhihu Inc ADR |
| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. Marriott 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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