Correlation Between Sunstone Hotel and Alumil Aluminium
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Alumil Aluminium 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 Sunstone Hotel and Alumil Aluminium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunstone Hotel Investors and Alumil Aluminium Industry, you can compare the effects of market volatilities on Sunstone Hotel and Alumil Aluminium 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 Sunstone Hotel with a short position of Alumil Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Alumil Aluminium.
Diversification Opportunities for Sunstone Hotel and Alumil Aluminium
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunstone and Alumil is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Alumil Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumil Aluminium Industry and Sunstone 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 Sunstone Hotel Investors are associated (or correlated) with Alumil Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumil Aluminium Industry has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Alumil Aluminium go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Alumil Aluminium
Assuming the 90 days horizon Sunstone Hotel is expected to generate 1.41 times less return on investment than Alumil Aluminium. In addition to that, Sunstone Hotel is 1.22 times more volatile than Alumil Aluminium Industry. It trades about 0.21 of its total potential returns per unit of risk. Alumil Aluminium Industry is currently generating about 0.35 per unit of volatility. If you would invest 281.00 in Alumil Aluminium Industry on September 12, 2024 and sell it today you would earn a total of 131.00 from holding Alumil Aluminium Industry or generate 46.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Alumil Aluminium Industry
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Alumil Aluminium Industry |
Sunstone Hotel and Alumil Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Alumil Aluminium
The main advantage of trading using opposite Sunstone Hotel and Alumil Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Alumil Aluminium 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 Alumil Aluminium will offset losses from the drop in Alumil Aluminium's long position.| Sunstone Hotel vs. Host Hotels Resorts | Sunstone Hotel vs. Xenia Hotels Resorts | Sunstone Hotel vs. Summit Hotel Properties | Sunstone Hotel vs. ASHFORD HOSPITTRUST |
| Alumil Aluminium vs. IDP EDUCATION LTD | Alumil Aluminium vs. TAL Education Group | Alumil Aluminium vs. G8 EDUCATION | Alumil Aluminium vs. Boyd Gaming |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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