Correlation Between PPHE HOTEL and CANON MARKETING

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

Diversification Opportunities for PPHE HOTEL and CANON MARKETING

0.59

Correlation Coefficient

PPHE HOTEL  CANON MARKETING

Very weak diversification

The 3 months correlation between PPHE and CANON is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and CANON MARKETING go up and down completely randomly.

Pair Corralation between PPHE HOTEL and CANON MARKETING

Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to under-perform the CANON MARKETING. But the stock apears to be less risky and, when comparing its historical volatility, PPHE HOTEL GROUP is 1.13 times less risky than CANON MARKETING. The stock trades about -0.01 of its potential returns per unit of risk. The CANON MARKETING JP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,520  in CANON MARKETING JP on September 24, 2024 and sell it today you would earn a total of  620.00  from holding CANON MARKETING JP or generate 24.6% 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.  CANON MARKETING JP

PPHE HOTEL GROUP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PPHE HOTEL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CANON MARKETING JP

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, CANON MARKETING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PPHE HOTEL and CANON MARKETING

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

The idea behind PPHE HOTEL GROUP and CANON MARKETING JP 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 CEOs Directory module to screen CEOs from public companies around the world.