Correlation Between PPHE Hotel and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and Electronic Arts 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 Electronic Arts 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 Electronic Arts, you can compare the effects of market volatilities on PPHE Hotel and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Electronic Arts.
Diversification Opportunities for PPHE Hotel and Electronic Arts
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PPHE and Electronic is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Electronic Arts go up and down completely randomly.
Pair Corralation between PPHE Hotel and Electronic Arts
Assuming the 90 days trading horizon PPHE Hotel is expected to generate 3.0 times less return on investment than Electronic Arts. In addition to that, PPHE Hotel is 1.4 times more volatile than Electronic Arts. It trades about 0.01 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.05 per unit of volatility. If you would invest 12,404 in Electronic Arts on August 31, 2024 and sell it today you would earn a total of 3,947 from holding Electronic Arts or generate 31.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.96% |
| Values | Daily Returns |
PPHE Hotel Group vs. Electronic Arts
Performance |
| Timeline |
| PPHE Hotel Group |
| Electronic Arts |
PPHE Hotel and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Electronic Arts
The main advantage of trading using opposite PPHE Hotel and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| PPHE Hotel vs. Berkshire Hathaway | PPHE Hotel vs. Hyundai Motor | PPHE Hotel vs. Samsung Electronics Co | PPHE Hotel vs. Samsung Electronics Co |
| Electronic Arts vs. Neometals | Electronic Arts vs. Coor Service Management | Electronic Arts vs. Aeorema Communications Plc | Electronic Arts vs. JLEN Environmental Assets |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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