Correlation Between Armada Hflr and Pyramisa Hotels

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

By analyzing existing cross correlation between Armada Hflr Pr and Pyramisa Hotels, you can compare the effects of market volatilities on Armada Hflr and Pyramisa 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 Armada Hflr with a short position of Pyramisa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Pyramisa Hotels.

Diversification Opportunities for Armada Hflr and Pyramisa Hotels

0.71

Correlation Coefficient

Armada Hflr  Pyramisa Hotels

Poor diversification

The 3 months correlation between Armada and Pyramisa is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Pyramisa Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyramisa Hotels and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Pyramisa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyramisa Hotels has no effect on the direction of Armada Hflr i.e., Armada Hflr and Pyramisa Hotels go up and down completely randomly.

Pair Corralation between Armada Hflr and Pyramisa Hotels

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Pyramisa Hotels. In addition to that, Armada Hflr is 1.4 times more volatile than Pyramisa Hotels. It trades about -0.21 of its total potential returns per unit of risk. Pyramisa Hotels is currently generating about -0.17 per unit of volatility. If you would invest  12,947  in Pyramisa Hotels on December 29, 2024 and sell it today you would lose (1,647) from holding Pyramisa Hotels or give up 12.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	83.61%
Values	Daily Returns

Armada Hflr Pr  vs.  Pyramisa Hotels

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pyramisa Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pyramisa Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Armada Hflr and Pyramisa Hotels

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

The idea behind Armada Hflr Pr and Pyramisa Hotels 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.