Correlation Between Eutelsat Communications and Hoteles Bestprice

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

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

Diversification Opportunities for Eutelsat Communications and Hoteles Bestprice

-0.65

Correlation Coefficient

Eutelsat Communications  Hoteles Bestprice

Excellent diversification

The 3 months correlation between Eutelsat and Hoteles is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eutelsat Communications SA and Hoteles Bestprice SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles Bestprice and Eutelsat Communications 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 Eutelsat Communications SA are associated (or correlated) with Hoteles Bestprice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles Bestprice has no effect on the direction of Eutelsat Communications i.e., Eutelsat Communications and Hoteles Bestprice go up and down completely randomly.

Pair Corralation between Eutelsat Communications and Hoteles Bestprice

Assuming the 90 days trading horizon Eutelsat Communications SA is expected to under-perform the Hoteles Bestprice. In addition to that, Eutelsat Communications is 6.55 times more volatile than Hoteles Bestprice SA. It trades about -0.02 of its total potential returns per unit of risk. Hoteles Bestprice SA is currently generating about 0.18 per unit of volatility. If you would invest  300.00  in Hoteles Bestprice SA on December 3, 2024 and sell it today you would earn a total of  50.00  from holding Hoteles Bestprice SA or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Eutelsat Communications SA  vs.  Hoteles Bestprice SA

Eutelsat Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eutelsat Communications SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hoteles Bestprice

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hoteles Bestprice SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hoteles Bestprice reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eutelsat Communications and Hoteles Bestprice

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

The idea behind Eutelsat Communications SA and Hoteles Bestprice SA 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.