Correlation Between Leofoo Development and Ambassador Hotel
Can any of the company-specific risk be diversified away by investing in both Leofoo Development and Ambassador Hotel 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 Leofoo Development and Ambassador Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leofoo Development Co and Ambassador Hotel, you can compare the effects of market volatilities on Leofoo Development and Ambassador Hotel 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 Leofoo Development with a short position of Ambassador Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leofoo Development and Ambassador Hotel.
Diversification Opportunities for Leofoo Development and Ambassador Hotel
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leofoo and Ambassador is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Leofoo Development Co and Ambassador Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador Hotel and Leofoo Development 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 Leofoo Development Co are associated (or correlated) with Ambassador Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Hotel has no effect on the direction of Leofoo Development i.e., Leofoo Development and Ambassador Hotel go up and down completely randomly.
Pair Corralation between Leofoo Development and Ambassador Hotel
Assuming the 90 days trading horizon Leofoo Development Co is expected to generate 0.94 times more return on investment than Ambassador Hotel. However, Leofoo Development Co is 1.06 times less risky than Ambassador Hotel. It trades about 0.06 of its potential returns per unit of risk. Ambassador Hotel is currently generating about -0.03 per unit of risk. If you would invest 1,735 in Leofoo Development Co on December 5, 2024 and sell it today you would earn a total of 65.00 from holding Leofoo Development Co or generate 3.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Leofoo Development Co vs. Ambassador Hotel
Performance |
Timeline |
Leofoo Development |
Ambassador Hotel |
Leofoo Development and Ambassador Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leofoo Development and Ambassador Hotel
The main advantage of trading using opposite Leofoo Development and Ambassador Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leofoo Development position performs unexpectedly, Ambassador Hotel 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 Ambassador Hotel will offset losses from the drop in Ambassador Hotel's long position.Leofoo Development vs. First Hotel Co | Leofoo Development vs. Hotel Holiday Garden | Leofoo Development vs. Taiwan Tea Corp | Leofoo Development vs. Far Eastern Department |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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