Correlation Between Cellnex Telecom and NH Hoteles

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

By analyzing existing cross correlation between Cellnex Telecom SA and NH Hoteles, you can compare the effects of market volatilities on Cellnex Telecom and NH Hoteles 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 Cellnex Telecom with a short position of NH Hoteles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and NH Hoteles.

Diversification Opportunities for Cellnex Telecom and NH Hoteles

-0.21

Correlation Coefficient

Cellnex Telecom  NH Hoteles

Very good diversification

The 3 months correlation between Cellnex and NHH is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and NH Hoteles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Hoteles and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with NH Hoteles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Hoteles has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and NH Hoteles go up and down completely randomly.

Pair Corralation between Cellnex Telecom and NH Hoteles

Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the NH Hoteles. In addition to that, Cellnex Telecom is 1.01 times more volatile than NH Hoteles. It trades about -0.1 of its total potential returns per unit of risk. NH Hoteles is currently generating about 0.12 per unit of volatility. If you would invest  406.00  in NH Hoteles on September 13, 2024 and sell it today you would earn a total of  43.00  from holding NH Hoteles or generate 10.59% return on investment over 90 days.

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

Cellnex Telecom SA  vs.  NH Hoteles

Cellnex Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

NH Hoteles

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NH Hoteles are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, NH Hoteles may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cellnex Telecom and NH Hoteles

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

The idea behind Cellnex Telecom SA and NH Hoteles 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.