Correlation Between CAVELL TOURISTIC and CONSTANCE HOTELS

Can any of the company-specific risk be diversified away by investing in both CAVELL TOURISTIC and CONSTANCE 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 CAVELL TOURISTIC and CONSTANCE HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAVELL TOURISTIC INVESTMENTS and CONSTANCE HOTELS SERVICES, you can compare the effects of market volatilities on CAVELL TOURISTIC and CONSTANCE 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 CAVELL TOURISTIC with a short position of CONSTANCE HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVELL TOURISTIC and CONSTANCE HOTELS.

Diversification Opportunities for CAVELL TOURISTIC and CONSTANCE HOTELS

0.36

Correlation Coefficient

CAVELL TOURISTIC  CONSTANCE HOTELS

Weak diversification

The 3 months correlation between CAVELL and CONSTANCE is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CAVELL TOURISTIC INVESTMENTS and CONSTANCE HOTELS SERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTANCE HOTELS SERVICES and CAVELL TOURISTIC 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 CAVELL TOURISTIC INVESTMENTS are associated (or correlated) with CONSTANCE HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTANCE HOTELS SERVICES has no effect on the direction of CAVELL TOURISTIC i.e., CAVELL TOURISTIC and CONSTANCE HOTELS go up and down completely randomly.

Pair Corralation between CAVELL TOURISTIC and CONSTANCE HOTELS

Assuming the 90 days trading horizon CAVELL TOURISTIC INVESTMENTS is expected to under-perform the CONSTANCE HOTELS. In addition to that, CAVELL TOURISTIC is 1.7 times more volatile than CONSTANCE HOTELS SERVICES. It trades about -0.13 of its total potential returns per unit of risk. CONSTANCE HOTELS SERVICES is currently generating about -0.01 per unit of volatility. If you would invest  2,030  in CONSTANCE HOTELS SERVICES on October 12, 2024 and sell it today you would lose (130.00) from holding CONSTANCE HOTELS SERVICES or give up 6.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	54.62%
Values	Daily Returns

CAVELL TOURISTIC INVESTMENTS  vs.  CONSTANCE HOTELS SERVICES

CAVELL TOURISTIC INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAVELL TOURISTIC INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CONSTANCE HOTELS SERVICES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTANCE HOTELS SERVICES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CONSTANCE HOTELS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CAVELL TOURISTIC and CONSTANCE HOTELS

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

The idea behind CAVELL TOURISTIC INVESTMENTS and CONSTANCE HOTELS SERVICES 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.