Correlation Between CeoTronics and INTERCONT HOTELS

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

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

Diversification Opportunities for CeoTronics and INTERCONT HOTELS

-0.07

Correlation Coefficient

CeoTronics  INTERCONT HOTELS

Good diversification

The 3 months correlation between CeoTronics and INTERCONT is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and CeoTronics 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 CeoTronics AG are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of CeoTronics i.e., CeoTronics and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between CeoTronics and INTERCONT HOTELS

Assuming the 90 days trading horizon CeoTronics AG is expected to generate 1.54 times more return on investment than INTERCONT HOTELS. However, CeoTronics is 1.54 times more volatile than INTERCONT HOTELS. It trades about 0.09 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about -0.01 per unit of risk. If you would invest  670.00  in CeoTronics AG on December 4, 2024 and sell it today you would earn a total of  70.00  from holding CeoTronics AG or generate 10.45% return on investment over 90 days.

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

CeoTronics AG  vs.  INTERCONT HOTELS

CeoTronics AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, CeoTronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

INTERCONT HOTELS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CeoTronics and INTERCONT HOTELS

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

The idea behind CeoTronics AG and INTERCONT HOTELS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.