Correlation Between CONSTANCE HOTELS and UNITED INVESTMENTS

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

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

Diversification Opportunities for CONSTANCE HOTELS and UNITED INVESTMENTS

-0.12

Correlation Coefficient

CONSTANCE HOTELS  UNITED INVESTMENTS

Good diversification

The 3 months correlation between CONSTANCE and UNITED is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CONSTANCE HOTELS SERVICES and UNITED INVESTMENTS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED INVESTMENTS LTD and CONSTANCE HOTELS 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 CONSTANCE HOTELS SERVICES are associated (or correlated) with UNITED INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED INVESTMENTS LTD has no effect on the direction of CONSTANCE HOTELS i.e., CONSTANCE HOTELS and UNITED INVESTMENTS go up and down completely randomly.

Pair Corralation between CONSTANCE HOTELS and UNITED INVESTMENTS

Assuming the 90 days trading horizon CONSTANCE HOTELS SERVICES is expected to under-perform the UNITED INVESTMENTS. But the stock apears to be less risky and, when comparing its historical volatility, CONSTANCE HOTELS SERVICES is 7.32 times less risky than UNITED INVESTMENTS. The stock trades about 0.0 of its potential returns per unit of risk. The UNITED INVESTMENTS LTD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  420.00  in UNITED INVESTMENTS LTD on September 15, 2024 and sell it today you would lose (90.00) from holding UNITED INVESTMENTS LTD or give up 21.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.53%
Values	Daily Returns

CONSTANCE HOTELS SERVICES  vs.  UNITED INVESTMENTS LTD

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

UNITED INVESTMENTS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED INVESTMENTS LTD 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CONSTANCE HOTELS and UNITED INVESTMENTS

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

The idea behind CONSTANCE HOTELS SERVICES and UNITED INVESTMENTS LTD 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.