Correlation Between Ashford Hospitality and PICC Property

Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality and PICC Property 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 Ashford Hospitality and PICC Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ashford Hospitality Trust and PICC Property and, you can compare the effects of market volatilities on Ashford Hospitality and PICC Property 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 Ashford Hospitality with a short position of PICC Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and PICC Property.

Diversification Opportunities for Ashford Hospitality and PICC Property

-0.18

Correlation Coefficient

Ashford Hospitality  PICC Property

Good diversification

The 3 months correlation between Ashford and PICC is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust and PICC Property and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICC Property and Ashford Hospitality 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 Ashford Hospitality Trust are associated (or correlated) with PICC Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICC Property has no effect on the direction of Ashford Hospitality i.e., Ashford Hospitality and PICC Property go up and down completely randomly.

Pair Corralation between Ashford Hospitality and PICC Property

Considering the 90-day investment horizon Ashford Hospitality is expected to generate 11.45 times less return on investment than PICC Property. In addition to that, Ashford Hospitality is 1.91 times more volatile than PICC Property and. It trades about 0.0 of its total potential returns per unit of risk. PICC Property and is currently generating about 0.08 per unit of volatility. If you would invest  3,862  in PICC Property and on November 28, 2024 and sell it today you would earn a total of  438.00  from holding PICC Property and or generate 11.34% return on investment over 90 days.

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

Ashford Hospitality Trust  vs.  PICC Property and

Ashford Hospitality Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashford Hospitality Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Ashford Hospitality is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

PICC Property

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, PICC Property showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashford Hospitality and PICC Property

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

The idea behind Ashford Hospitality Trust and PICC Property and 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.