Correlation Between Host Hotels and Aptitude Software

Can any of the company-specific risk be diversified away by investing in both Host Hotels and Aptitude Software 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 Host Hotels and Aptitude Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Host Hotels Resorts and Aptitude Software Group, you can compare the effects of market volatilities on Host Hotels and Aptitude Software 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 Host Hotels with a short position of Aptitude Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Aptitude Software.

Diversification Opportunities for Host Hotels and Aptitude Software

-0.12

Correlation Coefficient

Host Hotels  Aptitude Software

Good diversification

The 3 months correlation between Host and Aptitude is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Aptitude Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptitude Software and Host Hotels 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 Host Hotels Resorts are associated (or correlated) with Aptitude Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptitude Software has no effect on the direction of Host Hotels i.e., Host Hotels and Aptitude Software go up and down completely randomly.

Pair Corralation between Host Hotels and Aptitude Software

Assuming the 90 days trading horizon Host Hotels Resorts is expected to under-perform the Aptitude Software. But the stock apears to be less risky and, when comparing its historical volatility, Host Hotels Resorts is 1.17 times less risky than Aptitude Software. The stock trades about -0.23 of its potential returns per unit of risk. The Aptitude Software Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  33,200  in Aptitude Software Group on October 8, 2024 and sell it today you would lose (200.00) from holding Aptitude Software Group or give up 0.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Host Hotels Resorts  vs.  Aptitude Software Group

Host Hotels Resorts

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Host Hotels Resorts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Host Hotels is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aptitude Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptitude Software Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aptitude Software is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Host Hotels and Aptitude Software

The main advantage of trading using opposite Host Hotels and Aptitude Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Aptitude Software 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 Aptitude Software will offset losses from the drop in Aptitude Software's long position.

The idea behind Host Hotels Resorts and Aptitude Software Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.