Correlation Between Les Hotels and Jacquet Metal

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

By analyzing existing cross correlation between Les Hotels Bav and Jacquet Metal Service, you can compare the effects of market volatilities on Les Hotels and Jacquet Metal 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 Les Hotels with a short position of Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and Jacquet Metal.

Diversification Opportunities for Les Hotels and Jacquet Metal

0.03

Correlation Coefficient

Les Hotels  Jacquet Metal

Significant diversification

The 3 months correlation between Les and Jacquet is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service and Les Hotels 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 Les Hotels Bav are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Les Hotels i.e., Les Hotels and Jacquet Metal go up and down completely randomly.

Pair Corralation between Les Hotels and Jacquet Metal

Assuming the 90 days trading horizon Les Hotels is expected to generate 2.78 times less return on investment than Jacquet Metal. In addition to that, Les Hotels is 1.16 times more volatile than Jacquet Metal Service. It trades about 0.04 of its total potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.12 per unit of volatility. If you would invest  1,704  in Jacquet Metal Service on December 29, 2024 and sell it today you would earn a total of  292.00  from holding Jacquet Metal Service or generate 17.14% return on investment over 90 days.

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

Les Hotels Bav  vs.  Jacquet Metal Service

Les Hotels Bav

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Les Hotels Bav are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Les Hotels is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Jacquet Metal Service

Risk-Adjusted Performance

OK

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

Pair Trading with Les Hotels and Jacquet Metal

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

The idea behind Les Hotels Bav and Jacquet Metal Service 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.