Correlation Between EVS Broadcast and PPHE HOTEL

Can any of the company-specific risk be diversified away by investing in both EVS Broadcast and PPHE HOTEL 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 EVS Broadcast and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVS Broadcast Equipment and PPHE HOTEL GROUP, you can compare the effects of market volatilities on EVS Broadcast and PPHE HOTEL 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 EVS Broadcast with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVS Broadcast and PPHE HOTEL.

Diversification Opportunities for EVS Broadcast and PPHE HOTEL

0.79

Correlation Coefficient

EVS Broadcast  PPHE HOTEL

Poor diversification

The 3 months correlation between EVS and PPHE is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and EVS Broadcast 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 EVS Broadcast Equipment are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and PPHE HOTEL go up and down completely randomly.

Pair Corralation between EVS Broadcast and PPHE HOTEL

Assuming the 90 days trading horizon EVS Broadcast is expected to generate 1.27 times less return on investment than PPHE HOTEL. But when comparing it to its historical volatility, EVS Broadcast Equipment is 1.24 times less risky than PPHE HOTEL. It trades about 0.21 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,480  in PPHE HOTEL GROUP on October 6, 2024 and sell it today you would earn a total of  230.00  from holding PPHE HOTEL GROUP or generate 15.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

EVS Broadcast Equipment  vs.  PPHE HOTEL GROUP

EVS Broadcast Equipment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, EVS Broadcast may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with EVS Broadcast and PPHE HOTEL

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

The idea behind EVS Broadcast Equipment and PPHE HOTEL GROUP 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.