Correlation Between Accor S and Hotel Majestic

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

Diversification Opportunities for Accor S and Hotel Majestic

0.24

Correlation Coefficient

Accor S  Hotel Majestic

Modest diversification

The 3 months correlation between Accor and Hotel is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Accor S A and Hotel Majestic Cannes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Majestic Cannes 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 Hotel Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Majestic Cannes has no effect on the direction of Accor S i.e., Accor S and Hotel Majestic go up and down completely randomly.

Pair Corralation between Accor S and Hotel Majestic

Assuming the 90 days horizon Accor S A is expected to generate 0.68 times more return on investment than Hotel Majestic. However, Accor S A is 1.47 times less risky than Hotel Majestic. It trades about 0.09 of its potential returns per unit of risk. Hotel Majestic Cannes is currently generating about 0.04 per unit of risk. If you would invest  2,734  in Accor S A on December 2, 2024 and sell it today you would earn a total of  2,072  from holding Accor S A or generate 75.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.43%
Values	Daily Returns

Accor S A  vs.  Hotel Majestic Cannes

Accor S A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Accor S A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Accor S may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hotel Majestic Cannes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hotel Majestic Cannes has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hotel Majestic is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Accor S and Hotel Majestic

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

The idea behind Accor S A and Hotel Majestic Cannes 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.