Correlation Between Group Up and HOYA Resort

Can any of the company-specific risk be diversified away by investing in both Group Up and HOYA Resort 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 Group Up and HOYA Resort into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Group Up Industrial and HOYA Resort Hotel, you can compare the effects of market volatilities on Group Up and HOYA Resort 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 Group Up with a short position of HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group Up and HOYA Resort.

Diversification Opportunities for Group Up and HOYA Resort

0.18

Correlation Coefficient

Group Up  HOYA Resort

Average diversification

The 3 months correlation between Group and HOYA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Group Up Industrial and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel and Group Up 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 Group Up Industrial are associated (or correlated) with HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of Group Up i.e., Group Up and HOYA Resort go up and down completely randomly.

Pair Corralation between Group Up and HOYA Resort

Assuming the 90 days trading horizon Group Up Industrial is expected to under-perform the HOYA Resort. In addition to that, Group Up is 1.14 times more volatile than HOYA Resort Hotel. It trades about -0.08 of its total potential returns per unit of risk. HOYA Resort Hotel is currently generating about 0.11 per unit of volatility. If you would invest  1,850  in HOYA Resort Hotel on September 19, 2024 and sell it today you would earn a total of  65.00  from holding HOYA Resort Hotel or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Group Up Industrial  vs.  HOYA Resort Hotel

Group Up Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Group Up Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

HOYA Resort Hotel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Resort Hotel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, HOYA Resort is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Group Up and HOYA Resort

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

The idea behind Group Up Industrial and HOYA Resort Hotel 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.