Correlation Between PPHE HOTEL and Trupanion

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

Diversification Opportunities for PPHE HOTEL and Trupanion

0.1

Correlation Coefficient

PPHE HOTEL  Trupanion

Average diversification

The 3 months correlation between PPHE and Trupanion is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding PPHE HOTEL GROUP and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of PPHE HOTEL i.e., PPHE HOTEL and Trupanion go up and down completely randomly.

Pair Corralation between PPHE HOTEL and Trupanion

Assuming the 90 days trading horizon PPHE HOTEL GROUP is expected to generate 0.63 times more return on investment than Trupanion. However, PPHE HOTEL GROUP is 1.59 times less risky than Trupanion. It trades about 0.1 of its potential returns per unit of risk. Trupanion is currently generating about 0.02 per unit of risk. If you would invest  1,380  in PPHE HOTEL GROUP on October 14, 2024 and sell it today you would earn a total of  150.00  from holding PPHE HOTEL GROUP or generate 10.87% return on investment over 90 days.

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

PPHE HOTEL GROUP  vs.  Trupanion

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 February 2025.

Trupanion

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trupanion are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Trupanion is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PPHE HOTEL and Trupanion

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

The idea behind PPHE HOTEL GROUP and Trupanion 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.