Correlation Between Hotel Holiday and My Humble

Can any of the company-specific risk be diversified away by investing in both Hotel Holiday and My Humble 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 Hotel Holiday and My Humble into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hotel Holiday Garden and My Humble House, you can compare the effects of market volatilities on Hotel Holiday and My Humble 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 Hotel Holiday with a short position of My Humble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and My Humble.

Diversification Opportunities for Hotel Holiday and My Humble

0.77

Correlation Coefficient

Hotel Holiday  My Humble

Poor diversification

The 3 months correlation between Hotel and 2739 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden and My Humble House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on My Humble House and Hotel Holiday 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 Hotel Holiday Garden are associated (or correlated) with My Humble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of My Humble House has no effect on the direction of Hotel Holiday i.e., Hotel Holiday and My Humble go up and down completely randomly.

Pair Corralation between Hotel Holiday and My Humble

Assuming the 90 days trading horizon Hotel Holiday Garden is expected to under-perform the My Humble. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Holiday Garden is 2.1 times less risky than My Humble. The stock trades about -0.04 of its potential returns per unit of risk. The My Humble House is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,120  in My Humble House on September 26, 2024 and sell it today you would earn a total of  2,030  from holding My Humble House or generate 65.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Hotel Holiday Garden  vs.  My Humble House

Hotel Holiday Garden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Holiday Garden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

My Humble House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days My Humble House has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Hotel Holiday and My Humble

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

The idea behind Hotel Holiday Garden and My Humble House 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.