Correlation Between Hoteles City and Glencore Plc

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

By analyzing existing cross correlation between Hoteles City Express and Glencore plc, you can compare the effects of market volatilities on Hoteles City and Glencore Plc 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 Hoteles City with a short position of Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoteles City and Glencore Plc.

Diversification Opportunities for Hoteles City and Glencore Plc

0.0

Correlation Coefficient

Hoteles City  Glencore Plc

Pay attention - limited upside

The 3 months correlation between Hoteles and Glencore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles City Express and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc and Hoteles City 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 Hoteles City Express are associated (or correlated) with Glencore Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore plc has no effect on the direction of Hoteles City i.e., Hoteles City and Glencore Plc go up and down completely randomly.

Pair Corralation between Hoteles City and Glencore Plc

Assuming the 90 days trading horizon Hoteles City Express is expected to under-perform the Glencore Plc. In addition to that, Hoteles City is 1.84 times more volatile than Glencore plc. It trades about -0.04 of its total potential returns per unit of risk. Glencore plc is currently generating about -0.04 per unit of volatility. If you would invest  11,565  in Glencore plc on October 23, 2024 and sell it today you would lose (2,576) from holding Glencore plc or give up 22.27% of portfolio value over 90 days.

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

Hoteles City Express  vs.  Glencore plc

Hoteles City Express

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Hoteles City Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Glencore plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Glencore Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hoteles City and Glencore Plc

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

The idea behind Hoteles City Express and Glencore plc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.