Correlation Between Centara Hotels and Amata Summit

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

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

Diversification Opportunities for Centara Hotels and Amata Summit

0.09

Correlation Coefficient

Centara Hotels  Amata Summit

Significant diversification

The 3 months correlation between Centara and Amata is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Centara Hotels Resorts and Amata Summit Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amata Summit Growth and Centara 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 Centara Hotels Resorts are associated (or correlated) with Amata Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amata Summit Growth has no effect on the direction of Centara Hotels i.e., Centara Hotels and Amata Summit go up and down completely randomly.

Pair Corralation between Centara Hotels and Amata Summit

Assuming the 90 days trading horizon Centara Hotels Resorts is expected to generate 169.28 times more return on investment than Amata Summit. However, Centara Hotels is 169.28 times more volatile than Amata Summit Growth. It trades about 0.16 of its potential returns per unit of risk. Amata Summit Growth is currently generating about 0.14 per unit of risk. If you would invest  441.00  in Centara Hotels Resorts on September 3, 2024 and sell it today you would earn a total of  17.00  from holding Centara Hotels Resorts or generate 3.85% return on investment over 90 days.

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

Centara Hotels Resorts  vs.  Amata Summit Growth

Centara Hotels Resorts

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centara Hotels Resorts are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Centara Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Amata Summit Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amata Summit Growth are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amata Summit may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Centara Hotels and Amata Summit

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

The idea behind Centara Hotels Resorts and Amata Summit Growth 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.