Correlation Between Affluent Medical and Hoteles Bestprice

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

By analyzing existing cross correlation between Affluent Medical SAS and Hoteles Bestprice SA, you can compare the effects of market volatilities on Affluent Medical and Hoteles Bestprice 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 Affluent Medical with a short position of Hoteles Bestprice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affluent Medical and Hoteles Bestprice.

Diversification Opportunities for Affluent Medical and Hoteles Bestprice

0.12

Correlation Coefficient

Affluent Medical  Hoteles Bestprice

Average diversification

The 3 months correlation between Affluent and Hoteles is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Affluent Medical SAS and Hoteles Bestprice SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles Bestprice and Affluent Medical 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 Affluent Medical SAS are associated (or correlated) with Hoteles Bestprice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles Bestprice has no effect on the direction of Affluent Medical i.e., Affluent Medical and Hoteles Bestprice go up and down completely randomly.

Pair Corralation between Affluent Medical and Hoteles Bestprice

Assuming the 90 days trading horizon Affluent Medical is expected to generate 4.69 times less return on investment than Hoteles Bestprice. In addition to that, Affluent Medical is 1.42 times more volatile than Hoteles Bestprice SA. It trades about 0.03 of its total potential returns per unit of risk. Hoteles Bestprice SA is currently generating about 0.21 per unit of volatility. If you would invest  300.00  in Hoteles Bestprice SA on December 26, 2024 and sell it today you would earn a total of  66.00  from holding Hoteles Bestprice SA or generate 22.0% return on investment over 90 days.

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

Affluent Medical SAS  vs.  Hoteles Bestprice SA

Affluent Medical SAS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Affluent Medical SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Affluent Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hoteles Bestprice

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hoteles Bestprice SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hoteles Bestprice reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Affluent Medical and Hoteles Bestprice

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

The idea behind Affluent Medical SAS and Hoteles Bestprice SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.