Correlation Between Summit Hotel and Compagnie Financière
Can any of the company-specific risk be diversified away by investing in both Summit Hotel and Compagnie Financière 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 Compagnie Financière 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 Compagnie Financire Richemont, you can compare the effects of market volatilities on Summit Hotel and Compagnie Financière 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 Compagnie Financière. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Compagnie Financière.
Diversification Opportunities for Summit Hotel and Compagnie Financière
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Compagnie is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financière 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 Compagnie Financière. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financière has no effect on the direction of Summit Hotel i.e., Summit Hotel and Compagnie Financière go up and down completely randomly.
Pair Corralation between Summit Hotel and Compagnie Financière
Assuming the 90 days horizon Summit Hotel Properties is not expected to generate positive returns. However, Summit Hotel Properties is 1.36 times less risky than Compagnie Financière. It waists most of its returns potential to compensate for thr risk taken. Compagnie Financière is generating about 0.04 per unit of risk. If you would invest 1,363 in Compagnie Financire Richemont on November 6, 2024 and sell it today you would earn a total of 537.00 from holding Compagnie Financire Richemont or generate 39.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Hotel Properties vs. Compagnie Financire Richemont
Performance |
| Timeline |
| Summit Hotel Properties |
| Compagnie Financière |
Summit Hotel and Compagnie Financière Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Hotel and Compagnie Financière
The main advantage of trading using opposite Summit Hotel and Compagnie Financière positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, Compagnie Financière 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 Compagnie Financière will offset losses from the drop in Compagnie Financière's long position.| Summit Hotel vs. HOCHSCHILD MINING | Summit Hotel vs. Magic Software Enterprises | Summit Hotel vs. DETALION GAMES SA | Summit Hotel vs. TROPHY GAMES DEV |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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