Correlation Between Bittnet Systems and Compania Hoteliera

Can any of the company-specific risk be diversified away by investing in both Bittnet Systems and Compania Hoteliera 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 Bittnet Systems and Compania Hoteliera into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bittnet Systems SA and Compania Hoteliera InterContinental, you can compare the effects of market volatilities on Bittnet Systems and Compania Hoteliera 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 Bittnet Systems with a short position of Compania Hoteliera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bittnet Systems and Compania Hoteliera.

Diversification Opportunities for Bittnet Systems and Compania Hoteliera

-0.29

Correlation Coefficient

Bittnet Systems  Compania Hoteliera

Very good diversification

The 3 months correlation between Bittnet and Compania is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bittnet Systems SA and Compania Hoteliera InterContin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Hoteliera and Bittnet Systems 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 Bittnet Systems SA are associated (or correlated) with Compania Hoteliera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Hoteliera has no effect on the direction of Bittnet Systems i.e., Bittnet Systems and Compania Hoteliera go up and down completely randomly.

Pair Corralation between Bittnet Systems and Compania Hoteliera

Assuming the 90 days trading horizon Bittnet Systems SA is expected to generate 3.01 times more return on investment than Compania Hoteliera. However, Bittnet Systems is 3.01 times more volatile than Compania Hoteliera InterContinental. It trades about 0.02 of its potential returns per unit of risk. Compania Hoteliera InterContinental is currently generating about -0.27 per unit of risk. If you would invest  16.00  in Bittnet Systems SA on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Bittnet Systems SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Bittnet Systems SA  vs.  Compania Hoteliera InterContin

Bittnet Systems SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bittnet Systems SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Compania Hoteliera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania Hoteliera InterContinental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Compania Hoteliera is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bittnet Systems and Compania Hoteliera

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

The idea behind Bittnet Systems SA and Compania Hoteliera InterContinental 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.