Correlation Between Summit Hotel and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and PPHE HOTEL 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 Summit Hotel and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and PPHE HOTEL GROUP, you can compare the effects of market volatilities on Summit Hotel and PPHE HOTEL 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 Summit Hotel with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and PPHE HOTEL.
Diversification Opportunities for Summit Hotel and PPHE HOTEL
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and PPHE is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and Summit 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 Summit Hotel Properties are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of Summit Hotel i.e., Summit Hotel and PPHE HOTEL go up and down completely randomly.
Pair Corralation between Summit Hotel and PPHE HOTEL
Assuming the 90 days horizon Summit Hotel is expected to generate 1.96 times less return on investment than PPHE HOTEL. In addition to that, Summit Hotel is 1.11 times more volatile than PPHE HOTEL GROUP. It trades about 0.02 of its total potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.03 per unit of volatility. If you would invest 1,279 in PPHE HOTEL GROUP on September 14, 2024 and sell it today you would earn a total of 311.00 from holding PPHE HOTEL GROUP or generate 24.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| Summit Hotel Properties |
| PPHE HOTEL GROUP |
Summit Hotel and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and PPHE HOTEL
The main advantage of trading using opposite Summit Hotel and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, PPHE HOTEL 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.| Summit Hotel vs. NORWEGIAN AIR SHUT | Summit Hotel vs. TOREX SEMICONDUCTOR LTD | Summit Hotel vs. Ryanair Holdings plc | Summit Hotel vs. Magnachip Semiconductor |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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