Correlation Between DISTRICT METALS and PPHE HOTEL

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

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

Diversification Opportunities for DISTRICT METALS and PPHE HOTEL

0.36

Correlation Coefficient

DISTRICT METALS  PPHE HOTEL

Weak diversification

The 3 months correlation between DISTRICT and PPHE is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and DISTRICT METALS 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 DISTRICT METALS are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of DISTRICT METALS i.e., DISTRICT METALS and PPHE HOTEL go up and down completely randomly.

Pair Corralation between DISTRICT METALS and PPHE HOTEL

Assuming the 90 days trading horizon DISTRICT METALS is expected to generate 2.25 times more return on investment than PPHE HOTEL. However, DISTRICT METALS is 2.25 times more volatile than PPHE HOTEL GROUP. It trades about -0.05 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about -0.12 per unit of risk. If you would invest  26.00  in DISTRICT METALS on December 29, 2024 and sell it today you would lose (4.00) from holding DISTRICT METALS or give up 15.38% of portfolio value over 90 days.

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

DISTRICT METALS  vs.  PPHE HOTEL GROUP

DISTRICT METALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DISTRICT METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PPHE HOTEL GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days PPHE HOTEL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with DISTRICT METALS and PPHE HOTEL

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

The idea behind DISTRICT METALS and PPHE HOTEL GROUP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.