Correlation Between AAC TECHNOLOGHLDGADR and HYATT HOTELS

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

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

Diversification Opportunities for AAC TECHNOLOGHLDGADR and HYATT HOTELS

0.77

Correlation Coefficient

AAC TECHNOLOGHLDGADR  HYATT HOTELS

Poor diversification

The 3 months correlation between AAC and HYATT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR are associated (or correlated) with HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and HYATT HOTELS go up and down completely randomly.

Pair Corralation between AAC TECHNOLOGHLDGADR and HYATT HOTELS

Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 1.75 times more return on investment than HYATT HOTELS. However, AAC TECHNOLOGHLDGADR is 1.75 times more volatile than HYATT HOTELS A. It trades about 0.2 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.14 per unit of risk. If you would invest  310.00  in AAC TECHNOLOGHLDGADR on September 14, 2024 and sell it today you would earn a total of  150.00  from holding AAC TECHNOLOGHLDGADR or generate 48.39% return on investment over 90 days.

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

AAC TECHNOLOGHLDGADR  vs.  HYATT HOTELS A

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.

HYATT HOTELS A

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HYATT HOTELS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAC TECHNOLOGHLDGADR and HYATT HOTELS

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

The idea behind AAC TECHNOLOGHLDGADR and HYATT HOTELS A 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.