Correlation Between Alkemy Capital and PPHE Hotel

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

By analyzing existing cross correlation between Alkemy Capital Investments and PPHE Hotel Group, you can compare the effects of market volatilities on Alkemy Capital and PPHE Hotel 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 Alkemy Capital with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkemy Capital and PPHE Hotel.

Diversification Opportunities for Alkemy Capital and PPHE Hotel

0.64

Correlation Coefficient

Alkemy Capital  PPHE Hotel

Poor diversification

The 3 months correlation between Alkemy and PPHE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alkemy Capital Investments and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group and Alkemy Capital 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 Alkemy Capital Investments are associated (or correlated) with PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of Alkemy Capital i.e., Alkemy Capital and PPHE Hotel go up and down completely randomly.

Pair Corralation between Alkemy Capital and PPHE Hotel

Assuming the 90 days trading horizon Alkemy Capital Investments is expected to generate 9.43 times more return on investment than PPHE Hotel. However, Alkemy Capital is 9.43 times more volatile than PPHE Hotel Group. It trades about 0.19 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about 0.19 per unit of risk. If you would invest  3,750  in Alkemy Capital Investments on October 6, 2024 and sell it today you would earn a total of  9,850  from holding Alkemy Capital Investments or generate 262.67% return on investment over 90 days.

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

Alkemy Capital Investments  vs.  PPHE Hotel Group

Alkemy Capital Inves

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alkemy Capital Investments are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Alkemy Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

PPHE Hotel Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, PPHE Hotel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkemy Capital and PPHE Hotel

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

The idea behind Alkemy Capital Investments and PPHE Hotel Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.