Correlation Between Braemar Hotels and Advanced Oxygen

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

By analyzing existing cross correlation between Braemar Hotels Resorts and Advanced Oxygen Technologies, you can compare the effects of market volatilities on Braemar Hotels and Advanced Oxygen 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 Braemar Hotels with a short position of Advanced Oxygen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braemar Hotels and Advanced Oxygen.

Diversification Opportunities for Braemar Hotels and Advanced Oxygen

0.02

Correlation Coefficient

Braemar Hotels  Advanced Oxygen

Significant diversification

The 3 months correlation between Braemar and Advanced is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Braemar Hotels Resorts and Advanced Oxygen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Oxygen Tech and Braemar 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 Braemar Hotels Resorts are associated (or correlated) with Advanced Oxygen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Oxygen Tech has no effect on the direction of Braemar Hotels i.e., Braemar Hotels and Advanced Oxygen go up and down completely randomly.

Pair Corralation between Braemar Hotels and Advanced Oxygen

Assuming the 90 days trading horizon Braemar Hotels is expected to generate 15.74 times less return on investment than Advanced Oxygen. But when comparing it to its historical volatility, Braemar Hotels Resorts is 5.7 times less risky than Advanced Oxygen. It trades about 0.01 of its potential returns per unit of risk. Advanced Oxygen Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Advanced Oxygen Technologies on October 22, 2024 and sell it today you would lose (53.60) from holding Advanced Oxygen Technologies or give up 89.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Braemar Hotels Resorts  vs.  Advanced Oxygen Technologies

Braemar Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Braemar Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Preferred Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Advanced Oxygen Tech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Oxygen Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Advanced Oxygen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Braemar Hotels and Advanced Oxygen

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

The idea behind Braemar Hotels Resorts and Advanced Oxygen Technologies 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.