Correlation Between Les Htels and Accor S

Can any of the company-specific risk be diversified away by investing in both Les Htels and Accor S 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 Les Htels and Accor S into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Les Htels de and Accor S A, you can compare the effects of market volatilities on Les Htels and Accor S 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 Les Htels with a short position of Accor S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Htels and Accor S.

Diversification Opportunities for Les Htels and Accor S

0.38

Correlation Coefficient

Les Htels  Accor S

Weak diversification

The 3 months correlation between Les and Accor is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Les Htels de and Accor S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accor S A and Les Htels 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 Les Htels de are associated (or correlated) with Accor S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accor S A has no effect on the direction of Les Htels i.e., Les Htels and Accor S go up and down completely randomly.

Pair Corralation between Les Htels and Accor S

Assuming the 90 days trading horizon Les Htels de is expected to generate 4.75 times more return on investment than Accor S. However, Les Htels is 4.75 times more volatile than Accor S A. It trades about 0.02 of its potential returns per unit of risk. Accor S A is currently generating about -0.06 per unit of risk. If you would invest  116.00  in Les Htels de on December 28, 2024 and sell it today you would lose (6.00) from holding Les Htels de or give up 5.17% of portfolio value over 90 days.

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

Les Htels de  vs.  Accor S A

Les Htels de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Les Htels de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Les Htels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Accor S A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accor S A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Accor S is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Les Htels and Accor S

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

The idea behind Les Htels de and Accor S A 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 Transaction History module to view history of all your transactions and understand their impact on performance.