Correlation Between Host Hotels and Seraphim Space

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

Diversification Opportunities for Host Hotels and Seraphim Space

0.68

Correlation Coefficient

Host Hotels  Seraphim Space

Poor diversification

The 3 months correlation between Host and Seraphim is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Seraphim Space Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seraphim Space Investment 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 Seraphim Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seraphim Space Investment has no effect on the direction of Host Hotels i.e., Host Hotels and Seraphim Space go up and down completely randomly.

Pair Corralation between Host Hotels and Seraphim Space

Assuming the 90 days trading horizon Host Hotels is expected to generate 4.83 times less return on investment than Seraphim Space. But when comparing it to its historical volatility, Host Hotels Resorts is 1.17 times less risky than Seraphim Space. It trades about 0.01 of its potential returns per unit of risk. Seraphim Space Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,200  in Seraphim Space Investment on October 9, 2024 and sell it today you would earn a total of  240.00  from holding Seraphim Space Investment or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Host Hotels Resorts  vs.  Seraphim Space Investment

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.

Seraphim Space Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seraphim Space Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Seraphim Space is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Host Hotels and Seraphim Space

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

The idea behind Host Hotels Resorts and Seraphim Space Investment 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.