Correlation Between Covivio Hotels and Lexibook Linguistic

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

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

Diversification Opportunities for Covivio Hotels and Lexibook Linguistic

-0.08

Correlation Coefficient

Covivio Hotels  Lexibook Linguistic

Good diversification

The 3 months correlation between Covivio and Lexibook is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Covivio Hotels and Lexibook Linguistic Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexibook Linguistic 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 Lexibook Linguistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexibook Linguistic has no effect on the direction of Covivio Hotels i.e., Covivio Hotels and Lexibook Linguistic go up and down completely randomly.

Pair Corralation between Covivio Hotels and Lexibook Linguistic

Assuming the 90 days trading horizon Covivio Hotels is expected to generate 2.75 times less return on investment than Lexibook Linguistic. But when comparing it to its historical volatility, Covivio Hotels is 2.43 times less risky than Lexibook Linguistic. It trades about 0.05 of its potential returns per unit of risk. Lexibook Linguistic Electronic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  276.00  in Lexibook Linguistic Electronic on September 12, 2024 and sell it today you would earn a total of  124.00  from holding Lexibook Linguistic Electronic or generate 44.93% return on investment over 90 days.

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

Covivio Hotels  vs.  Lexibook Linguistic Electronic

Covivio Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covivio Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Covivio Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lexibook Linguistic

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lexibook Linguistic Electronic are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Lexibook Linguistic is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Covivio Hotels and Lexibook Linguistic

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

The idea behind Covivio Hotels and Lexibook Linguistic Electronic 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.