Correlation Between PPHE Hotel and URU Metals
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and URU 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 URU 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 URU Metals, you can compare the effects of market volatilities on PPHE Hotel and URU 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 URU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and URU Metals.
Diversification Opportunities for PPHE Hotel and URU Metals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPHE and URU is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and URU Metals go up and down completely randomly.
Pair Corralation between PPHE Hotel and URU Metals
Assuming the 90 days trading horizon PPHE Hotel Group is expected to under-perform the URU Metals. But the stock apears to be less risky and, when comparing its historical volatility, PPHE Hotel Group is 1.57 times less risky than URU Metals. The stock trades about -0.21 of its potential returns per unit of risk. The URU Metals is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 15,000 in URU Metals on November 3, 2024 and sell it today you would earn a total of 2,000 from holding URU Metals or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE Hotel Group vs. URU Metals
Performance |
| Timeline |
| PPHE Hotel Group |
| URU Metals |
PPHE Hotel and URU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and URU Metals
The main advantage of trading using opposite PPHE Hotel and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, URU 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 URU Metals will offset losses from the drop in URU Metals' long position.| PPHE Hotel vs. Litigation Capital Management | PPHE Hotel vs. CAP LEASE AVIATION | PPHE Hotel vs. Dairy Farm International | PPHE Hotel vs. SBM Offshore NV |
| URU Metals vs. Xeros Technology Group | URU Metals vs. Concurrent Technologies Plc | URU Metals vs. TechnipFMC PLC | URU Metals vs. Ashtead Technology 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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