Correlation Between Atour Lifestyle and GreenTree Hospitality

Can any of the company-specific risk be diversified away by investing in both Atour Lifestyle and GreenTree Hospitality 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 Atour Lifestyle and GreenTree Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Atour Lifestyle and GreenTree Hospitality

0.72

Correlation Coefficient

Atour Lifestyle  GreenTree Hospitality

Poor diversification

The 3 months correlation between Atour and GreenTree is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Atour Lifestyle Holdings and GreenTree Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenTree Hospitality and Atour Lifestyle 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 Atour Lifestyle Holdings are associated (or correlated) with GreenTree Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenTree Hospitality has no effect on the direction of Atour Lifestyle i.e., Atour Lifestyle and GreenTree Hospitality go up and down completely randomly.

Pair Corralation between Atour Lifestyle and GreenTree Hospitality

Given the investment horizon of 90 days Atour Lifestyle Holdings is expected to generate 0.91 times more return on investment than GreenTree Hospitality. However, Atour Lifestyle Holdings is 1.1 times less risky than GreenTree Hospitality. It trades about 0.17 of its potential returns per unit of risk. GreenTree Hospitality Group is currently generating about 0.06 per unit of risk. If you would invest  1,974  in Atour Lifestyle Holdings on September 16, 2024 and sell it today you would earn a total of  727.00  from holding Atour Lifestyle Holdings or generate 36.83% return on investment over 90 days.

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

Atour Lifestyle Holdings  vs.  GreenTree Hospitality Group

Atour Lifestyle Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atour Lifestyle Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Atour Lifestyle unveiled solid returns over the last few months and may actually be approaching a breakup point.

GreenTree Hospitality

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTree Hospitality Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, GreenTree Hospitality reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atour Lifestyle and GreenTree Hospitality

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

The idea behind Atour Lifestyle Holdings and GreenTree Hospitality 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.