Correlation Between Hilton Worldwide and Ucloudlink

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

By analyzing existing cross correlation between Hilton Worldwide Holdings and Ucloudlink Group, you can compare the effects of market volatilities on Hilton Worldwide and Ucloudlink 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 Hilton Worldwide with a short position of Ucloudlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Ucloudlink.

Diversification Opportunities for Hilton Worldwide and Ucloudlink

-0.47

Correlation Coefficient

Hilton Worldwide  Ucloudlink

Very good diversification

The 3 months correlation between Hilton and Ucloudlink is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Ucloudlink Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ucloudlink Group and Hilton Worldwide 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 Hilton Worldwide Holdings are associated (or correlated) with Ucloudlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ucloudlink Group has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Ucloudlink go up and down completely randomly.

Pair Corralation between Hilton Worldwide and Ucloudlink

Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to generate 0.16 times more return on investment than Ucloudlink. However, Hilton Worldwide Holdings is 6.41 times less risky than Ucloudlink. It trades about 0.13 of its potential returns per unit of risk. Ucloudlink Group is currently generating about 0.01 per unit of risk. If you would invest  15,408  in Hilton Worldwide Holdings on December 2, 2024 and sell it today you would earn a total of  11,088  from holding Hilton Worldwide Holdings or generate 71.96% return on investment over 90 days.

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

Hilton Worldwide Holdings  vs.  Ucloudlink Group

Hilton Worldwide Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Hilton Worldwide may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ucloudlink Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ucloudlink Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Ucloudlink disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hilton Worldwide and Ucloudlink

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

The idea behind Hilton Worldwide Holdings and Ucloudlink Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.