Correlation Between Hyatt Hotels and NIPPON STEEL

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

By analyzing existing cross correlation between Hyatt Hotels and NIPPON STEEL SPADR, you can compare the effects of market volatilities on Hyatt Hotels and NIPPON STEEL 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 NIPPON STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and NIPPON STEEL.

Diversification Opportunities for Hyatt Hotels and NIPPON STEEL

0.0

Correlation Coefficient

Hyatt Hotels  NIPPON STEEL

Pay attention - limited upside

The 3 months correlation between Hyatt and NIPPON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and NIPPON STEEL SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON STEEL SPADR 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 NIPPON STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON STEEL SPADR has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and NIPPON STEEL go up and down completely randomly.

Pair Corralation between Hyatt Hotels and NIPPON STEEL

Assuming the 90 days trading horizon Hyatt Hotels is expected to generate 0.65 times more return on investment than NIPPON STEEL. However, Hyatt Hotels is 1.55 times less risky than NIPPON STEEL. It trades about 0.06 of its potential returns per unit of risk. NIPPON STEEL SPADR is currently generating about 0.02 per unit of risk. If you would invest  9,553  in Hyatt Hotels on October 10, 2024 and sell it today you would earn a total of  5,132  from holding Hyatt Hotels or generate 53.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hyatt Hotels  vs.  NIPPON STEEL SPADR

Hyatt Hotels

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hyatt Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NIPPON STEEL SPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIPPON STEEL SPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NIPPON STEEL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hyatt Hotels and NIPPON STEEL

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

The idea behind Hyatt Hotels and NIPPON STEEL SPADR 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.