Correlation Between PPHE HOTEL and AIB Group

Can any of the company-specific risk be diversified away by investing in both PPHE HOTEL and AIB Group 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 AIB Group 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 AIB Group plc, you can compare the effects of market volatilities on PPHE HOTEL and AIB Group 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 AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE HOTEL and AIB Group.

Diversification Opportunities for PPHE HOTEL and AIB Group

0.42

Correlation Coefficient

PPHE HOTEL  AIB Group

Very weak diversification

The 3 months correlation between PPHE and AIB is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and AIB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group plc 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 AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group plc has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and AIB Group go up and down completely randomly.

Pair Corralation between PPHE HOTEL and AIB Group

Assuming the 90 days trading horizon PPHE HOTEL is expected to generate 4.07 times less return on investment than AIB Group. But when comparing it to its historical volatility, PPHE HOTEL GROUP is 1.68 times less risky than AIB Group. It trades about 0.02 of its potential returns per unit of risk. AIB Group plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  347.00  in AIB Group plc on October 22, 2024 and sell it today you would earn a total of  181.00  from holding AIB Group plc or generate 52.16% return on investment over 90 days.

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

PPHE HOTEL GROUP  vs.  AIB Group plc

PPHE HOTEL GROUP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, PPHE HOTEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AIB Group plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AIB Group plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AIB Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PPHE HOTEL and AIB Group

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

The idea behind PPHE HOTEL GROUP and AIB Group plc 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.