Correlation Between DOCDATA and INTERCONT HOTELS

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

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

Diversification Opportunities for DOCDATA and INTERCONT HOTELS

-0.84

Correlation Coefficient

DOCDATA  INTERCONT HOTELS

Pay attention - limited upside

The 3 months correlation between DOCDATA and INTERCONT is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding DOCDATA and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and DOCDATA 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 DOCDATA are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of DOCDATA i.e., DOCDATA and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between DOCDATA and INTERCONT HOTELS

Assuming the 90 days trading horizon DOCDATA is expected to under-perform the INTERCONT HOTELS. In addition to that, DOCDATA is 1.48 times more volatile than INTERCONT HOTELS. It trades about -0.07 of its total potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.23 per unit of volatility. If you would invest  8,800  in INTERCONT HOTELS on September 5, 2024 and sell it today you would earn a total of  2,900  from holding INTERCONT HOTELS or generate 32.95% return on investment over 90 days.

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

DOCDATA  vs.  INTERCONT HOTELS

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

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

INTERCONT HOTELS

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DOCDATA and INTERCONT HOTELS

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

The idea behind DOCDATA and INTERCONT HOTELS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.