Correlation Between E M and Pegasus Hotels

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

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

Diversification Opportunities for E M and Pegasus Hotels

0.15

Correlation Coefficient

E M  Pegasus Hotels

Average diversification

The 3 months correlation between EMLN0000 and Pegasus is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding E M L and Pegasus Hotels of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Hotels and E M 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 E M L are associated (or correlated) with Pegasus Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Hotels has no effect on the direction of E M i.e., E M and Pegasus Hotels go up and down completely randomly.

Pair Corralation between E M and Pegasus Hotels

Assuming the 90 days trading horizon E M L is expected to generate 2.6 times more return on investment than Pegasus Hotels. However, E M is 2.6 times more volatile than Pegasus Hotels of. It trades about 0.1 of its potential returns per unit of risk. Pegasus Hotels of is currently generating about 0.0 per unit of risk. If you would invest  360.00  in E M L on October 9, 2024 and sell it today you would earn a total of  30.00  from holding E M L or generate 8.33% return on investment over 90 days.

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

E M L  vs.  Pegasus Hotels of

E M L

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E M L are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, E M sustained solid returns over the last few months and may actually be approaching a breakup point.

Pegasus Hotels

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pegasus Hotels of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pegasus Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E M and Pegasus Hotels

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

The idea behind E M L and Pegasus Hotels of 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.