Correlation Between Premier Investments and Hotel Property
Can any of the company-specific risk be diversified away by investing in both Premier Investments and Hotel Property 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 Premier Investments and Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Investments and Hotel Property Investments, you can compare the effects of market volatilities on Premier Investments and Hotel Property 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 Premier Investments with a short position of Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Investments and Hotel Property.
Diversification Opportunities for Premier Investments and Hotel Property
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premier and Hotel is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Premier Investments and Hotel Property Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Property Inves and Premier Investments 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 Premier Investments are associated (or correlated) with Hotel Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Property Inves has no effect on the direction of Premier Investments i.e., Premier Investments and Hotel Property go up and down completely randomly.
Pair Corralation between Premier Investments and Hotel Property
Assuming the 90 days trading horizon Premier Investments is expected to under-perform the Hotel Property. In addition to that, Premier Investments is 46.24 times more volatile than Hotel Property Investments. It trades about -0.16 of its total potential returns per unit of risk. Hotel Property Investments is currently generating about 0.08 per unit of volatility. If you would invest 375.00 in Hotel Property Investments on November 7, 2024 and sell it today you would earn a total of 1.00 from holding Hotel Property Investments or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Investments vs. Hotel Property Investments
Performance |
| Timeline |
| Premier Investments |
| Hotel Property Inves |
Premier Investments and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Investments and Hotel Property
The main advantage of trading using opposite Premier Investments and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Investments position performs unexpectedly, Hotel Property 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 Hotel Property will offset losses from the drop in Hotel Property's long position.| Premier Investments vs. Australian Unity Office | Premier Investments vs. Mayfield Childcare | Premier Investments vs. Platinum Asia Investments | Premier Investments vs. Sandon Capital Investments |
| Hotel Property vs. Charter Hall Education | Hotel Property vs. Embark Education Group | Hotel Property vs. National Storage REIT | Hotel Property vs. Iron Road |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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