Correlation Between EIH Associated and Embassy Office

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Can any of the company-specific risk be diversified away by investing in both EIH Associated and Embassy Office 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 EIH Associated and Embassy Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EIH Associated Hotels and Embassy Office Parks, you can compare the effects of market volatilities on EIH Associated and Embassy Office 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 EIH Associated with a short position of Embassy Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIH Associated and Embassy Office.

Diversification Opportunities for EIH Associated and Embassy Office

EIHEmbassyDiversified AwayEIHEmbassyDiversified Away100%
-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between EIH and Embassy is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding EIH Associated Hotels and Embassy Office Parks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embassy Office Parks and EIH Associated 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 EIH Associated Hotels are associated (or correlated) with Embassy Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embassy Office Parks has no effect on the direction of EIH Associated i.e., EIH Associated and Embassy Office go up and down completely randomly.

Pair Corralation between EIH Associated and Embassy Office

Assuming the 90 days trading horizon EIH Associated Hotels is expected to generate 1.82 times more return on investment than Embassy Office. However, EIH Associated is 1.82 times more volatile than Embassy Office Parks. It trades about 0.07 of its potential returns per unit of risk. Embassy Office Parks is currently generating about -0.09 per unit of risk. If you would invest  35,590  in EIH Associated Hotels on October 26, 2024 and sell it today you would earn a total of  3,495  from holding EIH Associated Hotels or generate 9.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.36%
ValuesDaily Returns

EIH Associated Hotels  vs.  Embassy Office Parks

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -5051015
JavaScript chart by amCharts 3.21.15EIHAHOTELS EMBASSY-RR
       Timeline  
EIH Associated Hotels 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in EIH Associated Hotels are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, EIH Associated may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan360380400420440460
Embassy Office Parks 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Embassy Office Parks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan350360370380390400

EIH Associated and Embassy Office Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.94-5.95-3.96-1.96-0.03322.04.036.078.1 0.050.100.150.20
JavaScript chart by amCharts 3.21.15EIHAHOTELS EMBASSY-RR
       Returns  

Pair Trading with EIH Associated and Embassy Office

The main advantage of trading using opposite EIH Associated and Embassy Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIH Associated position performs unexpectedly, Embassy Office 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 Embassy Office will offset losses from the drop in Embassy Office's long position.
The idea behind EIH Associated Hotels and Embassy Office Parks 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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