Correlation Between Hyatt Hotels and Axway Software

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

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

Diversification Opportunities for Hyatt Hotels and Axway Software

0.23

Correlation Coefficient

Hyatt Hotels  Axway Software

Modest diversification

The 3 months correlation between Hyatt and Axway is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and Axway Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software SA and Hyatt 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 Hyatt Hotels are associated (or correlated) with Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software SA has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and Axway Software go up and down completely randomly.

Pair Corralation between Hyatt Hotels and Axway Software

Assuming the 90 days trading horizon Hyatt Hotels is expected to generate 1.05 times more return on investment than Axway Software. However, Hyatt Hotels is 1.05 times more volatile than Axway Software SA. It trades about 0.06 of its potential returns per unit of risk. Axway Software SA is currently generating about 0.03 per unit of risk. If you would invest  9,883  in Hyatt Hotels on October 24, 2024 and sell it today you would earn a total of  5,092  from holding Hyatt Hotels or generate 51.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Hyatt Hotels  vs.  Axway Software SA

Hyatt Hotels

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hyatt Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Axway Software SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Axway Software 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 Hyatt Hotels and Axway Software

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

The idea behind Hyatt Hotels and Axway Software SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.