Correlation Between INTER CARS and ASHFORD HOSPITTRUST

Can any of the company-specific risk be diversified away by investing in both INTER CARS and ASHFORD HOSPITTRUST 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 INTER CARS and ASHFORD HOSPITTRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTER CARS SA and ASHFORD HOSPITTRUST, you can compare the effects of market volatilities on INTER CARS and ASHFORD HOSPITTRUST 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 INTER CARS with a short position of ASHFORD HOSPITTRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and ASHFORD HOSPITTRUST.

Diversification Opportunities for INTER CARS and ASHFORD HOSPITTRUST

-0.06

Correlation Coefficient

INTER CARS  ASHFORD HOSPITTRUST

Good diversification

The 3 months correlation between INTER and ASHFORD is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and ASHFORD HOSPITTRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASHFORD HOSPITTRUST and INTER CARS 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 INTER CARS SA are associated (or correlated) with ASHFORD HOSPITTRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASHFORD HOSPITTRUST has no effect on the direction of INTER CARS i.e., INTER CARS and ASHFORD HOSPITTRUST go up and down completely randomly.

Pair Corralation between INTER CARS and ASHFORD HOSPITTRUST

If you would invest  12,040  in INTER CARS SA on October 21, 2024 and sell it today you would earn a total of  1,420  from holding INTER CARS SA or generate 11.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	17.65%
Values	Daily Returns

INTER CARS SA  vs.  ASHFORD HOSPITTRUST

INTER CARS SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, INTER CARS reported solid returns over the last few months and may actually be approaching a breakup point.

ASHFORD HOSPITTRUST

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days ASHFORD HOSPITTRUST has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ASHFORD HOSPITTRUST is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTER CARS and ASHFORD HOSPITTRUST

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

The idea behind INTER CARS SA and ASHFORD HOSPITTRUST 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.