Correlation Between Compania Hoteliera and Feper SA
Can any of the company-specific risk be diversified away by investing in both Compania Hoteliera and Feper SA 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 Compania Hoteliera and Feper SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Hoteliera InterContinental and Feper SA, you can compare the effects of market volatilities on Compania Hoteliera and Feper SA 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 Compania Hoteliera with a short position of Feper SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Hoteliera and Feper SA.
Diversification Opportunities for Compania Hoteliera and Feper SA
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compania and Feper is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Compania Hoteliera InterContin and Feper SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feper SA and Compania Hoteliera 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 Compania Hoteliera InterContinental are associated (or correlated) with Feper SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feper SA has no effect on the direction of Compania Hoteliera i.e., Compania Hoteliera and Feper SA go up and down completely randomly.
Pair Corralation between Compania Hoteliera and Feper SA
Assuming the 90 days trading horizon Compania Hoteliera is expected to generate 1.23 times less return on investment than Feper SA. In addition to that, Compania Hoteliera is 1.04 times more volatile than Feper SA. It trades about 0.04 of its total potential returns per unit of risk. Feper SA is currently generating about 0.05 per unit of volatility. If you would invest 15.00 in Feper SA on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Feper SA or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 79.84% |
| Values | Daily Returns |
Compania Hoteliera InterContin vs. Feper SA
Performance |
| Timeline |
| Compania Hoteliera |
| Feper SA |
Compania Hoteliera and Feper SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Hoteliera and Feper SA
The main advantage of trading using opposite Compania Hoteliera and Feper SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Hoteliera position performs unexpectedly, Feper SA 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 Feper SA will offset losses from the drop in Feper SA's long position.The idea behind Compania Hoteliera InterContinental and Feper SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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