Correlation Between Carrier Global and COVIVIO HOTELS

Can any of the company-specific risk be diversified away by investing in both Carrier Global and COVIVIO HOTELS 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 Carrier Global and COVIVIO HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carrier Global and COVIVIO HOTELS INH, you can compare the effects of market volatilities on Carrier Global and COVIVIO HOTELS 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 Carrier Global with a short position of COVIVIO HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and COVIVIO HOTELS.

Diversification Opportunities for Carrier Global and COVIVIO HOTELS

-0.65

Correlation Coefficient

Carrier Global  COVIVIO HOTELS

Excellent diversification

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

Pair Corralation between Carrier Global and COVIVIO HOTELS

Assuming the 90 days horizon Carrier Global is expected to generate 0.83 times more return on investment than COVIVIO HOTELS. However, Carrier Global is 1.2 times less risky than COVIVIO HOTELS. It trades about 0.16 of its potential returns per unit of risk. COVIVIO HOTELS INH is currently generating about -0.16 per unit of risk. If you would invest  6,565  in Carrier Global on October 23, 2024 and sell it today you would earn a total of  241.00  from holding Carrier Global or generate 3.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

Carrier Global  vs.  COVIVIO HOTELS INH

Carrier Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrier Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

COVIVIO HOTELS INH

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COVIVIO HOTELS INH are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COVIVIO HOTELS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carrier Global and COVIVIO HOTELS

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

The idea behind Carrier Global and COVIVIO HOTELS INH 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.