Correlation Between China Tontine and LuxUrban Hotels

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

By analyzing existing cross correlation between China Tontine Wines and LuxUrban Hotels 1300, you can compare the effects of market volatilities on China Tontine and LuxUrban 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 China Tontine with a short position of LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Tontine and LuxUrban Hotels.

Diversification Opportunities for China Tontine and LuxUrban Hotels

0.0

Correlation Coefficient

China Tontine  LuxUrban Hotels

Pay attention - limited upside

The 3 months correlation between China and LuxUrban is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tontine Wines and LuxUrban Hotels 1300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels 1300 and China Tontine 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 China Tontine Wines are associated (or correlated) with LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels 1300 has no effect on the direction of China Tontine i.e., China Tontine and LuxUrban Hotels go up and down completely randomly.

Pair Corralation between China Tontine and LuxUrban Hotels

Assuming the 90 days horizon China Tontine Wines is expected to generate 18.86 times more return on investment than LuxUrban Hotels. However, China Tontine is 18.86 times more volatile than LuxUrban Hotels 1300. It trades about 0.08 of its potential returns per unit of risk. LuxUrban Hotels 1300 is currently generating about -0.04 per unit of risk. If you would invest  10.00  in China Tontine Wines on October 24, 2024 and sell it today you would lose (2.90) from holding China Tontine Wines or give up 29.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	62.47%
Values	Daily Returns

China Tontine Wines  vs.  LuxUrban Hotels 1300

China Tontine Wines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Tontine Wines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Tontine is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LuxUrban Hotels 1300

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels 1300 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Preferred Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with China Tontine and LuxUrban Hotels

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

The idea behind China Tontine Wines and LuxUrban Hotels 1300 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.