Correlation Between PPHE Hotel and European Metals
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on PPHE Hotel and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and European Metals.
Diversification Opportunities for PPHE Hotel and European Metals
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PPHE and European is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and European Metals go up and down completely randomly.
Pair Corralation between PPHE Hotel and European Metals
Assuming the 90 days trading horizon PPHE Hotel Group is expected to under-perform the European Metals. But the stock apears to be less risky and, when comparing its historical volatility, PPHE Hotel Group is 1.91 times less risky than European Metals. The stock trades about -0.12 of its potential returns per unit of risk. The European Metals Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 725.00 in European Metals Holdings on October 13, 2024 and sell it today you would earn a total of 100.00 from holding European Metals Holdings or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE Hotel Group vs. European Metals Holdings
Performance |
| Timeline |
| PPHE Hotel Group |
| European Metals Holdings |
PPHE Hotel and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and European Metals
The main advantage of trading using opposite PPHE Hotel and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| PPHE Hotel vs. Oxford Technology 2 | PPHE Hotel vs. Pfeiffer Vacuum Technology | PPHE Hotel vs. Sabien Technology Group | PPHE Hotel vs. alstria office REIT AG |
| European Metals vs. American Homes 4 | European Metals vs. Clean Power Hydrogen | European Metals vs. PPHE Hotel Group | European Metals vs. Wyndham Hotels Resorts |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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