Correlation Between City Lodge and Sygnia
Can any of the company-specific risk be diversified away by investing in both City Lodge and Sygnia 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 Sygnia 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 Sygnia, you can compare the effects of market volatilities on City Lodge and Sygnia 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 Sygnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Lodge and Sygnia.
Diversification Opportunities for City Lodge and Sygnia
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between City and Sygnia is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding City Lodge Hotels and Sygnia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sygnia 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 Sygnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sygnia has no effect on the direction of City Lodge i.e., City Lodge and Sygnia go up and down completely randomly.
Pair Corralation between City Lodge and Sygnia
Assuming the 90 days trading horizon City Lodge Hotels is expected to generate 0.96 times more return on investment than Sygnia. However, City Lodge Hotels is 1.04 times less risky than Sygnia. It trades about 0.08 of its potential returns per unit of risk. Sygnia is currently generating about 0.05 per unit of risk. If you would invest 41,600 in City Lodge Hotels on September 24, 2024 and sell it today you would earn a total of 9,400 from holding City Lodge Hotels or generate 22.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
City Lodge Hotels vs. Sygnia
Performance |
Timeline |
City Lodge Hotels |
Sygnia |
City Lodge and Sygnia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with City Lodge and Sygnia
The main advantage of trading using opposite City Lodge and Sygnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Lodge position performs unexpectedly, Sygnia 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 Sygnia will offset losses from the drop in Sygnia's long position.City Lodge vs. Capitec Bank Holdings | City Lodge vs. Astoria Investments | City Lodge vs. Kumba Iron Ore | City Lodge vs. Ascendis Health |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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