Correlation Between Hotel Holiday and Hotel Royal
Can any of the company-specific risk be diversified away by investing in both Hotel Holiday and Hotel Royal 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 Hotel Royal 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 Hotel Royal Chihpen, you can compare the effects of market volatilities on Hotel Holiday and Hotel Royal 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 Hotel Royal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and Hotel Royal.
Diversification Opportunities for Hotel Holiday and Hotel Royal
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hotel and Hotel is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden and Hotel Royal Chihpen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Royal Chihpen 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 Hotel Royal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Royal Chihpen has no effect on the direction of Hotel Holiday i.e., Hotel Holiday and Hotel Royal go up and down completely randomly.
Pair Corralation between Hotel Holiday and Hotel Royal
Assuming the 90 days trading horizon Hotel Holiday Garden is expected to generate 0.58 times more return on investment than Hotel Royal. However, Hotel Holiday Garden is 1.71 times less risky than Hotel Royal. It trades about -0.09 of its potential returns per unit of risk. Hotel Royal Chihpen is currently generating about -0.07 per unit of risk. If you would invest 1,920 in Hotel Holiday Garden on September 26, 2024 and sell it today you would lose (290.00) from holding Hotel Holiday Garden or give up 15.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hotel Holiday Garden vs. Hotel Royal Chihpen
Performance |
Timeline |
Hotel Holiday Garden |
Hotel Royal Chihpen |
Hotel Holiday and Hotel Royal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hotel Holiday and Hotel Royal
The main advantage of trading using opposite Hotel Holiday and Hotel Royal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Holiday position performs unexpectedly, Hotel Royal 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 Hotel Royal will offset losses from the drop in Hotel Royal's long position.Hotel Holiday vs. First Hotel Co | Hotel Holiday vs. Leofoo Development Co | Hotel Holiday vs. Taiwan Tea Corp | Hotel Holiday vs. China Container Terminal |
Hotel Royal vs. Formosa International Hotels | Hotel Royal vs. Ambassador Hotel | Hotel Royal vs. FDC International Hotels | Hotel Royal vs. First Hotel Co |
Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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