Correlation Between Royal Orchid and Country Group
Can any of the company-specific risk be diversified away by investing in both Royal Orchid and Country Group 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 Royal Orchid and Country Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Orchid Hotel and Country Group Holdings, you can compare the effects of market volatilities on Royal Orchid and Country Group 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 Royal Orchid with a short position of Country Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Orchid and Country Group.
Diversification Opportunities for Royal Orchid and Country Group
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Royal and Country is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Royal Orchid Hotel and Country Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Group Holdings and Royal Orchid 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 Royal Orchid Hotel are associated (or correlated) with Country Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Group Holdings has no effect on the direction of Royal Orchid i.e., Royal Orchid and Country Group go up and down completely randomly.
Pair Corralation between Royal Orchid and Country Group
Assuming the 90 days trading horizon Royal Orchid is expected to generate 1.05 times less return on investment than Country Group. In addition to that, Royal Orchid is 1.0 times more volatile than Country Group Holdings. It trades about 0.04 of its total potential returns per unit of risk. Country Group Holdings is currently generating about 0.04 per unit of volatility. If you would invest 65.00 in Country Group Holdings on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Country Group Holdings or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Orchid Hotel vs. Country Group Holdings
Performance |
| Timeline |
| Royal Orchid Hotel |
| Country Group Holdings |
Royal Orchid and Country Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Orchid and Country Group
The main advantage of trading using opposite Royal Orchid and Country Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Orchid position performs unexpectedly, Country Group 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 Country Group will offset losses from the drop in Country Group's long position.| Royal Orchid vs. Laguna Resorts Hotels | Royal Orchid vs. Shangri La Hotel Public | Royal Orchid vs. Ramkhamhaeng Hospital Public | Royal Orchid vs. Regional Container Lines |
| Country Group vs. Asia Plus Group | Country Group vs. Globlex Holding Management | Country Group vs. Asia Green Energy | Country Group vs. Amanah Leasing Public |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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