Correlation Between Asia Hotel and Country Group

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

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

Diversification Opportunities for Asia Hotel and Country Group

0.81

Correlation Coefficient

Asia Hotel  Country Group

Very poor diversification

The 3 months correlation between Asia and Country is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Asia Hotel Public and Country Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Group Holdings and Asia Hotel 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 Asia Hotel Public are associated (or correlated) with Country Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Group Holdings has no effect on the direction of Asia Hotel i.e., Asia Hotel and Country Group go up and down completely randomly.

Pair Corralation between Asia Hotel and Country Group

Assuming the 90 days trading horizon Asia Hotel Public is expected to generate 0.64 times more return on investment than Country Group. However, Asia Hotel Public is 1.57 times less risky than Country Group. It trades about -0.14 of its potential returns per unit of risk. Country Group Holdings is currently generating about -0.2 per unit of risk. If you would invest  633.00  in Asia Hotel Public on December 30, 2024 and sell it today you would lose (103.00) from holding Asia Hotel Public or give up 16.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Asia Hotel Public  vs.  Country Group Holdings

Asia Hotel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Hotel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Country Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Country Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Asia Hotel and Country Group

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

The idea behind Asia Hotel Public and Country Group Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.