Correlation Between Cox ABG and Millenium Hotels

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

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

Diversification Opportunities for Cox ABG and Millenium Hotels

0.57

Correlation Coefficient

Cox ABG  Millenium Hotels

Very weak diversification

The 3 months correlation between Cox and Millenium is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cox ABG Group and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real and Cox ABG 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 Cox ABG Group are associated (or correlated) with Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Cox ABG i.e., Cox ABG and Millenium Hotels go up and down completely randomly.

Pair Corralation between Cox ABG and Millenium Hotels

Assuming the 90 days trading horizon Cox ABG Group is expected to generate 1.78 times more return on investment than Millenium Hotels. However, Cox ABG is 1.78 times more volatile than Millenium Hotels Real. It trades about -0.07 of its potential returns per unit of risk. Millenium Hotels Real is currently generating about -0.17 per unit of risk. If you would invest  960.00  in Cox ABG Group on December 23, 2024 and sell it today you would lose (78.00) from holding Cox ABG Group or give up 8.12% of portfolio value over 90 days.

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

Cox ABG Group  vs.  Millenium Hotels Real

Cox ABG Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cox ABG Group 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.

Millenium Hotels Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Millenium Hotels Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cox ABG and Millenium Hotels

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

The idea behind Cox ABG Group and Millenium Hotels Real 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.