Correlation Between Entech SE and Hoteles Bestprice

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

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

Diversification Opportunities for Entech SE and Hoteles Bestprice

0.71

Correlation Coefficient

Entech SE  Hoteles Bestprice

Poor diversification

The 3 months correlation between Entech and Hoteles is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Entech SE 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 Entech SE 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 Entech SE 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 Entech SE i.e., Entech SE and Hoteles Bestprice go up and down completely randomly.

Pair Corralation between Entech SE and Hoteles Bestprice

Assuming the 90 days trading horizon Entech SE SAS is expected to generate 2.39 times more return on investment than Hoteles Bestprice. However, Entech SE is 2.39 times more volatile than Hoteles Bestprice SA. It trades about 0.22 of its potential returns per unit of risk. Hoteles Bestprice SA is currently generating about 0.18 per unit of risk. If you would invest  506.00  in Entech SE SAS on December 4, 2024 and sell it today you would earn a total of  278.00  from holding Entech SE SAS or generate 54.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Entech SE SAS  vs.  Hoteles Bestprice SA

Entech SE SAS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Entech SE SAS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Entech SE reported solid returns over the last few months and may actually be approaching a breakup point.

Hoteles Bestprice

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hoteles Bestprice SA are ranked lower than 13 (%) 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 Entech SE and Hoteles Bestprice

The main advantage of trading using opposite Entech SE and Hoteles Bestprice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entech SE 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 Entech SE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.