Correlation Between PPHE HOTEL and AECOM TECHNOLOGY

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

Diversification Opportunities for PPHE HOTEL and AECOM TECHNOLOGY

0.23

Correlation Coefficient

PPHE HOTEL  AECOM TECHNOLOGY

Modest diversification

The 3 months correlation between PPHE and AECOM is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and AECOM TECHNOLOGY go up and down completely randomly.

Pair Corralation between PPHE HOTEL and AECOM TECHNOLOGY

Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to generate 1.15 times more return on investment than AECOM TECHNOLOGY. However, PPHE HOTEL is 1.15 times more volatile than AECOM TECHNOLOGY. It trades about 0.06 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.06 per unit of risk. If you would invest  1,243  in PPHE HOTEL GROUP on September 28, 2024 and sell it today you would earn a total of  387.00  from holding PPHE HOTEL GROUP or generate 31.13% return on investment over 90 days.

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

PPHE HOTEL GROUP  vs.  AECOM TECHNOLOGY

PPHE HOTEL GROUP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, PPHE HOTEL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AECOM TECHNOLOGY

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with PPHE HOTEL and AECOM TECHNOLOGY

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

The idea behind PPHE HOTEL GROUP and AECOM TECHNOLOGY 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.