Correlation Between Les Hotels and Hotelim Socit

Can any of the company-specific risk be diversified away by investing in both Les Hotels and Hotelim Socit 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 Hotelim Socit 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 Hotelim Socit Anonyme, you can compare the effects of market volatilities on Les Hotels and Hotelim Socit 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 Hotelim Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and Hotelim Socit.

Diversification Opportunities for Les Hotels and Hotelim Socit

-0.64

Correlation Coefficient

Les Hotels  Hotelim Socit

Excellent diversification

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

Pair Corralation between Les Hotels and Hotelim Socit

Assuming the 90 days trading horizon Les Hotels is expected to generate 7.17 times less return on investment than Hotelim Socit. But when comparing it to its historical volatility, Les Hotels Bav is 3.97 times less risky than Hotelim Socit. It trades about 0.03 of its potential returns per unit of risk. Hotelim Socit Anonyme is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,880  in Hotelim Socit Anonyme on September 4, 2024 and sell it today you would earn a total of  1,060  from holding Hotelim Socit Anonyme or generate 36.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.37%
Values	Daily Returns

Les Hotels Bav  vs.  Hotelim Socit Anonyme

Les Hotels Bav

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Les Hotels Bav has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Hotelim Socit Anonyme

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hotelim Socit Anonyme are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hotelim Socit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Les Hotels and Hotelim Socit

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

The idea behind Les Hotels Bav and Hotelim Socit Anonyme 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.