Correlation Between Host Hotels and Octopus Aim

Can any of the company-specific risk be diversified away by investing in both Host Hotels and Octopus Aim 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 Octopus Aim 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 Octopus Aim Vct, you can compare the effects of market volatilities on Host Hotels and Octopus Aim 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 Octopus Aim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Octopus Aim.

Diversification Opportunities for Host Hotels and Octopus Aim

-0.16

Correlation Coefficient

Host Hotels  Octopus Aim

Good diversification

The 3 months correlation between Host and Octopus is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Octopus Aim Vct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octopus Aim Vct 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 Octopus Aim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octopus Aim Vct has no effect on the direction of Host Hotels i.e., Host Hotels and Octopus Aim go up and down completely randomly.

Pair Corralation between Host Hotels and Octopus Aim

Assuming the 90 days trading horizon Host Hotels Resorts is expected to under-perform the Octopus Aim. In addition to that, Host Hotels is 2.69 times more volatile than Octopus Aim Vct. It trades about -0.05 of its total potential returns per unit of risk. Octopus Aim Vct is currently generating about -0.07 per unit of volatility. If you would invest  5,045  in Octopus Aim Vct on October 24, 2024 and sell it today you would lose (165.00) from holding Octopus Aim Vct or give up 3.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

Host Hotels Resorts  vs.  Octopus Aim Vct

Host Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Host Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Octopus Aim Vct

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Octopus Aim Vct has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Octopus Aim is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Host Hotels and Octopus Aim

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

The idea behind Host Hotels Resorts and Octopus Aim Vct 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.