Correlation Between Royal Orchid and Laguna Resorts
Can any of the company-specific risk be diversified away by investing in both Royal Orchid and Laguna Resorts 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 Laguna Resorts 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 Laguna Resorts Hotels, you can compare the effects of market volatilities on Royal Orchid and Laguna Resorts 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 Laguna Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Orchid and Laguna Resorts.
Diversification Opportunities for Royal Orchid and Laguna Resorts
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royal and Laguna is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Royal Orchid Hotel and Laguna Resorts Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laguna Resorts Hotels 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 Laguna Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laguna Resorts Hotels has no effect on the direction of Royal Orchid i.e., Royal Orchid and Laguna Resorts go up and down completely randomly.
Pair Corralation between Royal Orchid and Laguna Resorts
Assuming the 90 days trading horizon Royal Orchid is expected to generate 1.01 times less return on investment than Laguna Resorts. In addition to that, Royal Orchid is 1.0 times more volatile than Laguna Resorts Hotels. It trades about 0.12 of its total potential returns per unit of risk. Laguna Resorts Hotels is currently generating about 0.13 per unit of volatility. If you would invest 0.00 in Laguna Resorts Hotels on September 3, 2024 and sell it today you would earn a total of 3,900 from holding Laguna Resorts Hotels or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Orchid Hotel vs. Laguna Resorts Hotels
Performance |
| Timeline |
| Royal Orchid Hotel |
| Laguna Resorts Hotels |
Royal Orchid and Laguna Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Orchid and Laguna Resorts
The main advantage of trading using opposite Royal Orchid and Laguna Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Orchid position performs unexpectedly, Laguna Resorts 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 Laguna Resorts will offset losses from the drop in Laguna Resorts' long position.| Royal Orchid vs. OHTL Public | Royal Orchid vs. Laguna Resorts Hotels | Royal Orchid vs. Shangri La Hotel Public | Royal Orchid vs. Ramkhamhaeng Hospital Public |
| Laguna Resorts vs. OHTL Public | Laguna Resorts vs. LPN Development Public | Laguna Resorts vs. The Erawan Group | Laguna Resorts vs. MBK 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |