Correlation Between Chanson International and LuxUrban Hotels

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

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

Diversification Opportunities for Chanson International and LuxUrban Hotels

0.44

Correlation Coefficient

Chanson International  LuxUrban Hotels

Very weak diversification

The 3 months correlation between Chanson and LuxUrban is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Chanson International Holding and LuxUrban Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels and Chanson International 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 Chanson International Holding 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 has no effect on the direction of Chanson International i.e., Chanson International and LuxUrban Hotels go up and down completely randomly.

Pair Corralation between Chanson International and LuxUrban Hotels

Given the investment horizon of 90 days Chanson International Holding is expected to generate 2.59 times more return on investment than LuxUrban Hotels. However, Chanson International is 2.59 times more volatile than LuxUrban Hotels. It trades about 0.06 of its potential returns per unit of risk. LuxUrban Hotels is currently generating about -0.08 per unit of risk. If you would invest  245.00  in Chanson International Holding on October 7, 2024 and sell it today you would earn a total of  289.00  from holding Chanson International Holding or generate 117.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.72%
Values	Daily Returns

Chanson International Holding  vs.  LuxUrban Hotels

Chanson International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chanson International Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

LuxUrban Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Chanson International and LuxUrban Hotels

The main advantage of trading using opposite Chanson International and LuxUrban Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chanson International 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 Chanson International Holding and LuxUrban 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 Transaction History module to view history of all your transactions and understand their impact on performance.