Correlation Between Sappe Public and S Hotels
Can any of the company-specific risk be diversified away by investing in both Sappe Public and S Hotels 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 Sappe Public and S Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sappe Public and S Hotels and, you can compare the effects of market volatilities on Sappe Public and S Hotels 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 Sappe Public with a short position of S Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sappe Public and S Hotels.
Diversification Opportunities for Sappe Public and S Hotels
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sappe and SHR is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sappe Public and S Hotels and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S Hotels and Sappe Public 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 Sappe Public are associated (or correlated) with S Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S Hotels has no effect on the direction of Sappe Public i.e., Sappe Public and S Hotels go up and down completely randomly.
Pair Corralation between Sappe Public and S Hotels
Assuming the 90 days trading horizon Sappe Public is expected to under-perform the S Hotels. In addition to that, Sappe Public is 1.22 times more volatile than S Hotels and. It trades about -0.07 of its total potential returns per unit of risk. S Hotels and is currently generating about 0.03 per unit of volatility. If you would invest 220.00 in S Hotels and on August 27, 2024 and sell it today you would earn a total of 12.00 from holding S Hotels and or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sappe Public vs. S Hotels and
Performance |
| Timeline |
| Sappe Public |
| S Hotels |
Sappe Public and S Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sappe Public and S Hotels
The main advantage of trading using opposite Sappe Public and S Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sappe Public position performs unexpectedly, S Hotels 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 S Hotels will offset losses from the drop in S Hotels' long position.The idea behind Sappe Public and S Hotels and 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.| S Hotels vs. Central Plaza Hotel | S Hotels vs. The Erawan Group | S Hotels vs. Minor International Public | S Hotels vs. Advanced Info Service |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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