Correlation Between COVIVIO HOTELS and SECURITAS

Can any of the company-specific risk be diversified away by investing in both COVIVIO HOTELS and SECURITAS 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 SECURITAS 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 SECURITAS B , you can compare the effects of market volatilities on COVIVIO HOTELS and SECURITAS 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 SECURITAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of COVIVIO HOTELS and SECURITAS.

Diversification Opportunities for COVIVIO HOTELS and SECURITAS

0.51

Correlation Coefficient

COVIVIO HOTELS  SECURITAS

Very weak diversification

The 3 months correlation between COVIVIO and SECURITAS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding COVIVIO HOTELS INH and SECURITAS B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURITAS B 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 SECURITAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECURITAS B has no effect on the direction of COVIVIO HOTELS i.e., COVIVIO HOTELS and SECURITAS go up and down completely randomly.

Pair Corralation between COVIVIO HOTELS and SECURITAS

Assuming the 90 days horizon COVIVIO HOTELS is expected to generate 1.04 times less return on investment than SECURITAS. In addition to that, COVIVIO HOTELS is 1.18 times more volatile than SECURITAS B . It trades about 0.1 of its total potential returns per unit of risk. SECURITAS B is currently generating about 0.12 per unit of volatility. If you would invest  1,203  in SECURITAS B on December 24, 2024 and sell it today you would earn a total of  116.00  from holding SECURITAS B or generate 9.64% return on investment over 90 days.

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

COVIVIO HOTELS INH  vs.  SECURITAS B

COVIVIO HOTELS INH

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COVIVIO HOTELS INH are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, COVIVIO HOTELS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SECURITAS B

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SECURITAS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with COVIVIO HOTELS and SECURITAS

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

The idea behind COVIVIO HOTELS INH and SECURITAS B 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.