Correlation Between Workspace Group and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both Workspace Group 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 Workspace Group and PPHE Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workspace Group PLC and PPHE Hotel Group, you can compare the effects of market volatilities on Workspace Group 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 Workspace Group with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workspace Group and PPHE Hotel.
Diversification Opportunities for Workspace Group and PPHE Hotel
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Workspace and PPHE is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Workspace Group PLC 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 Workspace Group 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 Workspace Group PLC 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 Workspace Group i.e., Workspace Group and PPHE Hotel go up and down completely randomly.
Pair Corralation between Workspace Group and PPHE Hotel
Assuming the 90 days trading horizon Workspace Group PLC is expected to generate 1.25 times more return on investment than PPHE Hotel. However, Workspace Group is 1.25 times more volatile than PPHE Hotel Group. It trades about 0.03 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about -0.22 per unit of risk. If you would invest 54,800 in Workspace Group PLC on September 4, 2024 and sell it today you would earn a total of 400.00 from holding Workspace Group PLC or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workspace Group PLC vs. PPHE Hotel Group
Performance |
| Timeline |
| Workspace Group PLC |
| PPHE Hotel Group |
Workspace Group and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workspace Group and PPHE Hotel
The main advantage of trading using opposite Workspace Group and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workspace Group 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.| Workspace Group vs. PPHE Hotel Group | Workspace Group vs. Naked Wines plc | Workspace Group vs. Bellevue Healthcare Trust | Workspace Group vs. Virgin Wines UK |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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