Correlation Between FEMALE HEALTH and INTERCONT HOTELS

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

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

Diversification Opportunities for FEMALE HEALTH and INTERCONT HOTELS

0.35

Correlation Coefficient

FEMALE HEALTH  INTERCONT HOTELS

Weak diversification

The 3 months correlation between FEMALE and INTERCONT is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and FEMALE HEALTH 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 FEMALE HEALTH 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 FEMALE HEALTH i.e., FEMALE HEALTH and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between FEMALE HEALTH and INTERCONT HOTELS

Assuming the 90 days trading horizon FEMALE HEALTH is expected to generate 5.5 times more return on investment than INTERCONT HOTELS. However, FEMALE HEALTH is 5.5 times more volatile than INTERCONT HOTELS. It trades about -0.01 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about -0.15 per unit of risk. If you would invest  65.00  in FEMALE HEALTH on December 24, 2024 and sell it today you would lose (20.00) from holding FEMALE HEALTH or give up 30.77% of portfolio value over 90 days.

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

FEMALE HEALTH  vs.  INTERCONT HOTELS

FEMALE HEALTH

Risk-Adjusted Performance

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

INTERCONT HOTELS

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERCONT HOTELS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FEMALE HEALTH and INTERCONT HOTELS

The main advantage of trading using opposite FEMALE HEALTH and INTERCONT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEMALE HEALTH 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 FEMALE HEALTH 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.