Correlation Between PPHE Hotel and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and Arrow Electronics 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 PPHE Hotel and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE Hotel Group and Arrow Electronics, you can compare the effects of market volatilities on PPHE Hotel and Arrow Electronics 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 PPHE Hotel with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Arrow Electronics.
Diversification Opportunities for PPHE Hotel and Arrow Electronics
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between PPHE and Arrow is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and PPHE Hotel 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 PPHE Hotel Group are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Arrow Electronics go up and down completely randomly.
Pair Corralation between PPHE Hotel and Arrow Electronics
Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 1.25 times more return on investment than Arrow Electronics. However, PPHE Hotel is 1.25 times more volatile than Arrow Electronics. It trades about 0.29 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.17 per unit of risk. If you would invest 115,500 in PPHE Hotel Group on September 14, 2024 and sell it today you would earn a total of 15,500 from holding PPHE Hotel Group or generate 13.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE Hotel Group vs. Arrow Electronics
Performance |
| Timeline |
| PPHE Hotel Group |
| Arrow Electronics |
PPHE Hotel and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Arrow Electronics
The main advantage of trading using opposite PPHE Hotel and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| PPHE Hotel vs. Optima Health plc | PPHE Hotel vs. PureTech Health plc | PPHE Hotel vs. GlobalData PLC | PPHE Hotel vs. Omega Healthcare Investors |
| Arrow Electronics vs. Samsung Electronics Co | Arrow Electronics vs. Samsung Electronics Co | Arrow Electronics vs. Hyundai Motor | Arrow Electronics vs. Reliance Industries Ltd |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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