Correlation Between Promotora and Hoteles City
Can any of the company-specific risk be diversified away by investing in both Promotora and Hoteles City 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 Promotora and Hoteles City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and Hoteles City Express, you can compare the effects of market volatilities on Promotora and Hoteles City 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 Promotora with a short position of Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Hoteles City.
Diversification Opportunities for Promotora and Hoteles City
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Promotora and Hoteles is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express and Promotora 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 Promotora y Operadora are associated (or correlated) with Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of Promotora i.e., Promotora and Hoteles City go up and down completely randomly.
Pair Corralation between Promotora and Hoteles City
Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 0.82 times more return on investment than Hoteles City. However, Promotora y Operadora is 1.22 times less risky than Hoteles City. It trades about 0.03 of its potential returns per unit of risk. Hoteles City Express is currently generating about -0.05 per unit of risk. If you would invest 15,794 in Promotora y Operadora on August 30, 2024 and sell it today you would earn a total of 2,842 from holding Promotora y Operadora or generate 17.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promotora y Operadora vs. Hoteles City Express
Performance |
| Timeline |
| Promotora y Operadora |
| Hoteles City Express |
Promotora and Hoteles City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and Hoteles City
The main advantage of trading using opposite Promotora and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora position performs unexpectedly, Hoteles City 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 Hoteles City will offset losses from the drop in Hoteles City's long position.| Promotora vs. Grupo Profuturo SAB | Promotora vs. Corporacin Inmobiliaria Vesta | Promotora vs. Financiera Independencia SAB | Promotora vs. The Select Sector |
| Hoteles City vs. Samsung Electronics Co | Hoteles City vs. Berkshire Hathaway | Hoteles City vs. Banco Actinver SA | Hoteles City vs. Baidu Inc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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