Correlation Between Centrale DAchat and Les Hotels

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

By analyzing existing cross correlation between Centrale dAchat Franaise and Les Hotels Bav, you can compare the effects of market volatilities on Centrale DAchat and Les Hotels 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 Centrale DAchat with a short position of Les Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrale DAchat and Les Hotels.

Diversification Opportunities for Centrale DAchat and Les Hotels

0.14

Correlation Coefficient

Centrale DAchat  Les Hotels

Average diversification

The 3 months correlation between Centrale and Les is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Centrale dAchat Franaise and Les Hotels Bav in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Hotels Bav and Centrale DAchat 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 Centrale dAchat Franaise are associated (or correlated) with Les Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Hotels Bav has no effect on the direction of Centrale DAchat i.e., Centrale DAchat and Les Hotels go up and down completely randomly.

Pair Corralation between Centrale DAchat and Les Hotels

Assuming the 90 days trading horizon Centrale DAchat is expected to generate 1.95 times less return on investment than Les Hotels. But when comparing it to its historical volatility, Centrale dAchat Franaise is 2.25 times less risky than Les Hotels. It trades about 0.04 of its potential returns per unit of risk. Les Hotels Bav is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,200  in Les Hotels Bav on December 29, 2024 and sell it today you would earn a total of  300.00  from holding Les Hotels Bav or generate 4.17% return on investment over 90 days.

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

Centrale dAchat Franaise  vs.  Les Hotels Bav

Centrale dAchat Franaise

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centrale dAchat Franaise are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Centrale DAchat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Les Hotels Bav

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Les Hotels Bav are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Centrale DAchat and Les Hotels

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

The idea behind Centrale dAchat Franaise and Les Hotels Bav 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..