Correlation Between COVIVIO HOTELS and INTERCONT HOTELS

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

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

Diversification Opportunities for COVIVIO HOTELS and INTERCONT HOTELS

0.33

Correlation Coefficient

COVIVIO HOTELS  INTERCONT HOTELS

Weak diversification

The 3 months correlation between COVIVIO and INTERCONT is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding COVIVIO HOTELS INH and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and COVIVIO HOTELS 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 COVIVIO HOTELS INH are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of COVIVIO HOTELS i.e., COVIVIO HOTELS and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between COVIVIO HOTELS and INTERCONT HOTELS

Assuming the 90 days horizon COVIVIO HOTELS INH is expected to under-perform the INTERCONT HOTELS. In addition to that, COVIVIO HOTELS is 1.42 times more volatile than INTERCONT HOTELS. It trades about -0.18 of its total potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.18 per unit of volatility. If you would invest  11,900  in INTERCONT HOTELS on October 26, 2024 and sell it today you would earn a total of  400.00  from holding INTERCONT HOTELS or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

COVIVIO HOTELS INH  vs.  INTERCONT HOTELS

COVIVIO HOTELS INH

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COVIVIO HOTELS INH are ranked lower than 2 (%) 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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

INTERCONT HOTELS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COVIVIO HOTELS and INTERCONT HOTELS

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

The idea behind COVIVIO HOTELS INH and INTERCONT HOTELS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.