Correlation Between PPHE Hotel and Auto Trader
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on PPHE Hotel and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Auto Trader.
Diversification Opportunities for PPHE Hotel and Auto Trader
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PPHE and Auto is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Auto Trader go up and down completely randomly.
Pair Corralation between PPHE Hotel and Auto Trader
Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 1.19 times more return on investment than Auto Trader. However, PPHE Hotel is 1.19 times more volatile than Auto Trader Group. It trades about 0.05 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.05 per unit of risk. If you would invest 100,507 in PPHE Hotel Group on November 9, 2024 and sell it today you would earn a total of 36,993 from holding PPHE Hotel Group or generate 36.81% 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. Auto Trader Group
Performance |
| Timeline |
| PPHE Hotel Group |
| Auto Trader Group |
PPHE Hotel and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Auto Trader
The main advantage of trading using opposite PPHE Hotel and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| PPHE Hotel vs. Check Point Software | PPHE Hotel vs. Pfeiffer Vacuum Technology | PPHE Hotel vs. Fortune Brands Home | PPHE Hotel vs. Allianz Technology Trust |
| Auto Trader vs. Edita Food Industries | Auto Trader vs. Tyson Foods Cl | Auto Trader vs. Broadcom | Auto Trader vs. JB Hunt Transport |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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