Correlation Between PPHE Hotel and Aberforth Smaller
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and Aberforth Smaller 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 Aberforth Smaller 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 Aberforth Smaller Companies, you can compare the effects of market volatilities on PPHE Hotel and Aberforth Smaller 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 Aberforth Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Aberforth Smaller.
Diversification Opportunities for PPHE Hotel and Aberforth Smaller
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PPHE and Aberforth is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller 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 Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Aberforth Smaller go up and down completely randomly.
Pair Corralation between PPHE Hotel and Aberforth Smaller
Assuming the 90 days trading horizon PPHE Hotel Group is expected to under-perform the Aberforth Smaller. In addition to that, PPHE Hotel is 1.67 times more volatile than Aberforth Smaller Companies. It trades about -0.2 of its total potential returns per unit of risk. Aberforth Smaller Companies is currently generating about -0.08 per unit of volatility. If you would invest 148,000 in Aberforth Smaller Companies on November 5, 2024 and sell it today you would lose (3,200) from holding Aberforth Smaller Companies or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE Hotel Group vs. Aberforth Smaller Companies
Performance |
| Timeline |
| PPHE Hotel Group |
| Aberforth Smaller |
PPHE Hotel and Aberforth Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Aberforth Smaller
The main advantage of trading using opposite PPHE Hotel and Aberforth Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, Aberforth Smaller 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 Aberforth Smaller will offset losses from the drop in Aberforth Smaller's long position.| PPHE Hotel vs. SupplyMe Capital PLC | PPHE Hotel vs. SM Energy Co | PPHE Hotel vs. Grand Vision Media | PPHE Hotel vs. DG Innovate PLC |
| Aberforth Smaller vs. Travel Leisure Co | Aberforth Smaller vs. Polar Capital Technology | Aberforth Smaller vs. TechnipFMC PLC | Aberforth Smaller vs. Xeros Technology Group |
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 CEOs Directory module to screen CEOs from public companies around the world.
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