Correlation Between PPHE HOTEL and GAMING FAC

Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and GAMING FAC 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 PPHE HOTEL and GAMING FAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PPHE HOTEL GROUP and GAMING FAC SA, you can compare the effects of market volatilities on PPHE HOTEL and GAMING FAC 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 PPHE HOTEL with a short position of GAMING FAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and GAMING FAC.

Diversification Opportunities for PPHE HOTEL and GAMING FAC

-0.54

Correlation Coefficient

PPHE HOTEL  GAMING FAC

Excellent diversification

The 3 months correlation between PPHE and GAMING is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and GAMING FAC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMING FAC SA and PPHE HOTEL 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 PPHE HOTEL GROUP are associated (or correlated) with GAMING FAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMING FAC SA has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and GAMING FAC go up and down completely randomly.

Pair Corralation between PPHE HOTEL and GAMING FAC

Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to generate 0.45 times more return on investment than GAMING FAC. However, PPHE HOTEL GROUP is 2.2 times less risky than GAMING FAC. It trades about 0.21 of its potential returns per unit of risk. GAMING FAC SA is currently generating about -0.02 per unit of risk. If you would invest  1,400  in PPHE HOTEL GROUP on October 8, 2024 and sell it today you would earn a total of  300.00  from holding PPHE HOTEL GROUP or generate 21.43% return on investment over 90 days.

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

PPHE HOTEL GROUP  vs.  GAMING FAC SA

PPHE HOTEL GROUP

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, PPHE HOTEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PPHE HOTEL and GAMING FAC

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

The idea behind PPHE HOTEL GROUP and GAMING FAC SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.