Correlation Between HYATT HOTELS and KEISEI EL

Can any of the company-specific risk be diversified away by investing in both HYATT HOTELS and KEISEI EL 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 KEISEI EL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HYATT HOTELS A and KEISEI EL RAILWAY, you can compare the effects of market volatilities on HYATT HOTELS and KEISEI EL 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 KEISEI EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and KEISEI EL.

Diversification Opportunities for HYATT HOTELS and KEISEI EL

-0.05

Correlation Coefficient

HYATT HOTELS  KEISEI EL

Good diversification

The 3 months correlation between HYATT and KEISEI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and KEISEI EL RAILWAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEISEI EL RAILWAY 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 A are associated (or correlated) with KEISEI EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEISEI EL RAILWAY has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and KEISEI EL go up and down completely randomly.

Pair Corralation between HYATT HOTELS and KEISEI EL

Assuming the 90 days trading horizon HYATT HOTELS A is expected to generate 0.22 times more return on investment than KEISEI EL. However, HYATT HOTELS A is 4.5 times less risky than KEISEI EL. It trades about 0.06 of its potential returns per unit of risk. KEISEI EL RAILWAY is currently generating about -0.12 per unit of risk. If you would invest  14,096  in HYATT HOTELS A on September 28, 2024 and sell it today you would earn a total of  864.00  from holding HYATT HOTELS A or generate 6.13% return on investment over 90 days.

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

HYATT HOTELS A  vs.  KEISEI EL RAILWAY

HYATT HOTELS A

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HYATT HOTELS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KEISEI EL RAILWAY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEISEI EL RAILWAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with HYATT HOTELS and KEISEI EL

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

The idea behind HYATT HOTELS A and KEISEI EL RAILWAY 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.