Correlation Between Max Zipper and Hotel Holiday

Can any of the company-specific risk be diversified away by investing in both Max Zipper and Hotel Holiday 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 Max Zipper and Hotel Holiday into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Max Zipper Co and Hotel Holiday Garden, you can compare the effects of market volatilities on Max Zipper and Hotel Holiday 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 Max Zipper with a short position of Hotel Holiday. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Zipper and Hotel Holiday.

Diversification Opportunities for Max Zipper and Hotel Holiday

-0.35

Correlation Coefficient

Max Zipper  Hotel Holiday

Very good diversification

The 3 months correlation between Max and Hotel is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Max Zipper Co and Hotel Holiday Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Holiday Garden and Max Zipper 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 Max Zipper Co are associated (or correlated) with Hotel Holiday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Holiday Garden has no effect on the direction of Max Zipper i.e., Max Zipper and Hotel Holiday go up and down completely randomly.

Pair Corralation between Max Zipper and Hotel Holiday

Assuming the 90 days trading horizon Max Zipper Co is expected to under-perform the Hotel Holiday. In addition to that, Max Zipper is 3.91 times more volatile than Hotel Holiday Garden. It trades about -0.05 of its total potential returns per unit of risk. Hotel Holiday Garden is currently generating about -0.12 per unit of volatility. If you would invest  1,990  in Hotel Holiday Garden on October 4, 2024 and sell it today you would lose (365.00) from holding Hotel Holiday Garden or give up 18.34% of portfolio value over 90 days.

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

Max Zipper Co  vs.  Hotel Holiday Garden

Max Zipper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Max Zipper may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hotel Holiday Garden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Holiday Garden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Max Zipper and Hotel Holiday

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

The idea behind Max Zipper Co and Hotel Holiday Garden 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.