Correlation Between Accor S and Les Hotels

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

By analyzing existing cross correlation between Accor S A and Les Hotels Bav, you can compare the effects of market volatilities on Accor S and Les 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 Accor S with a short position of Les Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accor S and Les Hotels.

Diversification Opportunities for Accor S and Les Hotels

0.36

Correlation Coefficient

Accor S  Les Hotels

Weak diversification

The 3 months correlation between Accor and Les is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Accor S A and Les Hotels Bav in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Hotels Bav and Accor S 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 Accor S A are associated (or correlated) with Les Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Hotels Bav has no effect on the direction of Accor S i.e., Accor S and Les Hotels go up and down completely randomly.

Pair Corralation between Accor S and Les Hotels

Assuming the 90 days horizon Accor S A is expected to under-perform the Les Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Accor S A is 2.15 times less risky than Les Hotels. The stock trades about 0.0 of its potential returns per unit of risk. The Les Hotels Bav is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,150  in Les Hotels Bav on December 11, 2024 and sell it today you would earn a total of  700.00  from holding Les Hotels Bav or generate 9.79% return on investment over 90 days.

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

Accor S A  vs.  Les Hotels Bav

Accor S A

Risk-Adjusted Performance

Weak

Over the last 90 days Accor S A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Accor S is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Les Hotels Bav

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Les Hotels Bav are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Les Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Accor S and Les Hotels

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

The idea behind Accor S A and Les Hotels Bav 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..