Correlation Between PPHE HOTEL and AIR PRODCHEMICALS

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

Diversification Opportunities for PPHE HOTEL and AIR PRODCHEMICALS

-0.65

Correlation Coefficient

PPHE HOTEL  AIR PRODCHEMICALS

Excellent diversification

The 3 months correlation between PPHE and AIR is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and AIR PRODCHEMICALS go up and down completely randomly.

Pair Corralation between PPHE HOTEL and AIR PRODCHEMICALS

Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to generate 1.74 times more return on investment than AIR PRODCHEMICALS. However, PPHE HOTEL is 1.74 times more volatile than AIR PRODCHEMICALS. It trades about 0.21 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about -0.1 per unit of risk. If you would invest  1,490  in PPHE HOTEL GROUP on October 7, 2024 and sell it today you would earn a total of  220.00  from holding PPHE HOTEL GROUP or generate 14.77% return on investment over 90 days.

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

PPHE HOTEL GROUP  vs.  AIR PRODCHEMICALS

PPHE HOTEL GROUP

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PPHE HOTEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

AIR PRODCHEMICALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIR PRODCHEMICALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AIR PRODCHEMICALS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PPHE HOTEL and AIR PRODCHEMICALS

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

The idea behind PPHE HOTEL GROUP and AIR PRODCHEMICALS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .