Correlation Between Bilendi and Hoteles Bestprice

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

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

Diversification Opportunities for Bilendi and Hoteles Bestprice

0.67

Correlation Coefficient

Bilendi  Hoteles Bestprice

Poor diversification

The 3 months correlation between Bilendi and Hoteles is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bilendi and Hoteles Bestprice SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles Bestprice and Bilendi 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 Bilendi 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 Bilendi i.e., Bilendi and Hoteles Bestprice go up and down completely randomly.

Pair Corralation between Bilendi and Hoteles Bestprice

Assuming the 90 days trading horizon Bilendi is expected to generate 1.35 times less return on investment than Hoteles Bestprice. In addition to that, Bilendi is 1.31 times more volatile than Hoteles Bestprice SA. It trades about 0.12 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 24, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Bilendi  vs.  Hoteles Bestprice SA

Bilendi

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilendi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bilendi reported solid returns over the last few months and may actually be approaching a breakup point.

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 Bilendi and Hoteles Bestprice

The main advantage of trading using opposite Bilendi and Hoteles Bestprice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bilendi 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 Bilendi 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.

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 Directory module to find actively traded commodities issued by global exchanges.