Correlation Between PPHE Hotel and MOL Hungarian
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and MOL Hungarian 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 MOL Hungarian 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 MOL Hungarian Oil, you can compare the effects of market volatilities on PPHE Hotel and MOL Hungarian 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 MOL Hungarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and MOL Hungarian.
Diversification Opportunities for PPHE Hotel and MOL Hungarian
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PPHE and MOL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and MOL Hungarian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL Hungarian Oil 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 MOL Hungarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL Hungarian Oil has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and MOL Hungarian go up and down completely randomly.
Pair Corralation between PPHE Hotel and MOL Hungarian
Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 0.72 times more return on investment than MOL Hungarian. However, PPHE Hotel Group is 1.4 times less risky than MOL Hungarian. It trades about 0.24 of its potential returns per unit of risk. MOL Hungarian Oil is currently generating about 0.01 per unit of risk. If you would invest 118,000 in PPHE Hotel Group on September 13, 2024 and sell it today you would earn a total of 13,500 from holding PPHE Hotel Group or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE Hotel Group vs. MOL Hungarian Oil
Performance |
| Timeline |
| PPHE Hotel Group |
| MOL Hungarian Oil |
PPHE Hotel and MOL Hungarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and MOL Hungarian
The main advantage of trading using opposite PPHE Hotel and MOL Hungarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, MOL Hungarian 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 MOL Hungarian will offset losses from the drop in MOL Hungarian's long position.| PPHE Hotel vs. Cairo Communication SpA | PPHE Hotel vs. Charter Communications Cl | PPHE Hotel vs. Zurich Insurance Group | PPHE Hotel vs. Spirent Communications plc |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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