Correlation Between Soho House and Huazhu
Can any of the company-specific risk be diversified away by investing in both Soho House and Huazhu 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 Soho House and Huazhu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soho House Co and Huazhu Group, you can compare the effects of market volatilities on Soho House and Huazhu 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 Soho House with a short position of Huazhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soho House and Huazhu.
Diversification Opportunities for Soho House and Huazhu
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Soho and Huazhu is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Soho House Co and Huazhu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huazhu Group and Soho House 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 Soho House Co are associated (or correlated) with Huazhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huazhu Group has no effect on the direction of Soho House i.e., Soho House and Huazhu go up and down completely randomly.
Pair Corralation between Soho House and Huazhu
Given the investment horizon of 90 days Soho House Co is expected to generate 1.33 times more return on investment than Huazhu. However, Soho House is 1.33 times more volatile than Huazhu Group. It trades about 0.13 of its potential returns per unit of risk. Huazhu Group is currently generating about 0.06 per unit of risk. If you would invest 740.00 in Soho House Co on November 2, 2024 and sell it today you would earn a total of 58.00 from holding Soho House Co or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soho House Co vs. Huazhu Group
Performance |
| Timeline |
| Soho House |
| Huazhu Group |
Soho House and Huazhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soho House and Huazhu
The main advantage of trading using opposite Soho House and Huazhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soho House position performs unexpectedly, Huazhu 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 Huazhu will offset losses from the drop in Huazhu's long position.| Soho House vs. Plexus Corp | Soho House vs. Daily Journal Corp | Soho House vs. Youdao Inc | Soho House vs. Vishay Precision Group |
| Huazhu vs. GreenTree Hospitality Group | Huazhu vs. Soho House Co | Huazhu vs. InterContinental Hotels Group | Huazhu vs. The Intergroup |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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