Correlation Between PPHE Hotel and Tetragon Financial
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and Tetragon Financial 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 Tetragon Financial 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 Tetragon Financial Group, you can compare the effects of market volatilities on PPHE Hotel and Tetragon Financial 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 Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Tetragon Financial.
Diversification Opportunities for PPHE Hotel and Tetragon Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PPHE and Tetragon is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial 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 Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Tetragon Financial go up and down completely randomly.
Pair Corralation between PPHE Hotel and Tetragon Financial
Assuming the 90 days trading horizon PPHE Hotel Group is expected to under-perform the Tetragon Financial. But the stock apears to be less risky and, when comparing its historical volatility, PPHE Hotel Group is 1.1 times less risky than Tetragon Financial. The stock trades about -0.2 of its potential returns per unit of risk. The Tetragon Financial Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,395 in Tetragon Financial Group on November 7, 2024 and sell it today you would earn a total of 150.00 from holding Tetragon Financial Group or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PPHE Hotel Group vs. Tetragon Financial Group
Performance |
| Timeline |
| PPHE Hotel Group |
| Tetragon Financial |
PPHE Hotel and Tetragon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Tetragon Financial
The main advantage of trading using opposite PPHE Hotel and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, Tetragon Financial 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 Tetragon Financial will offset losses from the drop in Tetragon Financial's long position.| PPHE Hotel vs. Fulcrum Metals PLC | PPHE Hotel vs. Scandinavian Tobacco Group | PPHE Hotel vs. URU Metals | PPHE Hotel vs. Europa Metals |
| Tetragon Financial vs. Quadrise Plc | Tetragon Financial vs. ImmuPharma PLC | Tetragon Financial vs. Intuitive Investments Group | Tetragon Financial vs. European Metals Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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