Correlation Between City Lodge and Aspen Pharmacare
Can any of the company-specific risk be diversified away by investing in both City Lodge and Aspen Pharmacare 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 City Lodge and Aspen Pharmacare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Lodge Hotels and Aspen Pharmacare Holdings, you can compare the effects of market volatilities on City Lodge and Aspen Pharmacare 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 City Lodge with a short position of Aspen Pharmacare. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Lodge and Aspen Pharmacare.
Diversification Opportunities for City Lodge and Aspen Pharmacare
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between City and Aspen is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding City Lodge Hotels and Aspen Pharmacare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Pharmacare Holdings and City Lodge 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 City Lodge Hotels are associated (or correlated) with Aspen Pharmacare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Pharmacare Holdings has no effect on the direction of City Lodge i.e., City Lodge and Aspen Pharmacare go up and down completely randomly.
Pair Corralation between City Lodge and Aspen Pharmacare
Assuming the 90 days trading horizon City Lodge is expected to generate 3.34 times less return on investment than Aspen Pharmacare. In addition to that, City Lodge is 1.06 times more volatile than Aspen Pharmacare Holdings. It trades about 0.01 of its total potential returns per unit of risk. Aspen Pharmacare Holdings is currently generating about 0.04 per unit of volatility. If you would invest 1,315,300 in Aspen Pharmacare Holdings on September 23, 2024 and sell it today you would earn a total of 422,500 from holding Aspen Pharmacare Holdings or generate 32.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
City Lodge Hotels vs. Aspen Pharmacare Holdings
Performance |
Timeline |
City Lodge Hotels |
Aspen Pharmacare Holdings |
City Lodge and Aspen Pharmacare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with City Lodge and Aspen Pharmacare
The main advantage of trading using opposite City Lodge and Aspen Pharmacare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Lodge position performs unexpectedly, Aspen Pharmacare 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 Aspen Pharmacare will offset losses from the drop in Aspen Pharmacare's long position.City Lodge vs. Prosus NV | City Lodge vs. Compagnie Financire Richemont | City Lodge vs. British American Tobacco | City Lodge vs. Anglo American PLC |
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Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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