Correlation Between Covivio Hotels and Bilendi

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

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

Diversification Opportunities for Covivio Hotels and Bilendi

0.44

Correlation Coefficient

Covivio Hotels  Bilendi

Very weak diversification

The 3 months correlation between Covivio and Bilendi is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Covivio Hotels and Bilendi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilendi and Covivio 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 Covivio Hotels are associated (or correlated) with Bilendi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilendi has no effect on the direction of Covivio Hotels i.e., Covivio Hotels and Bilendi go up and down completely randomly.

Pair Corralation between Covivio Hotels and Bilendi

Assuming the 90 days trading horizon Covivio Hotels is expected to generate 0.77 times more return on investment than Bilendi. However, Covivio Hotels is 1.3 times less risky than Bilendi. It trades about 0.1 of its potential returns per unit of risk. Bilendi is currently generating about 0.06 per unit of risk. If you would invest  2,010  in Covivio Hotels on December 25, 2024 and sell it today you would earn a total of  200.00  from holding Covivio Hotels or generate 9.95% return on investment over 90 days.

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

Covivio Hotels  vs.  Bilendi

Covivio Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Covivio Hotels are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Covivio Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bilendi

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilendi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bilendi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Covivio Hotels and Bilendi

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

The idea behind Covivio Hotels and Bilendi 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.