Correlation Between Host Hotels and Hawesko Holding

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

By analyzing existing cross correlation between Host Hotels Resorts and Hawesko Holding AG, you can compare the effects of market volatilities on Host Hotels and Hawesko Holding 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 Host Hotels with a short position of Hawesko Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Hawesko Holding.

Diversification Opportunities for Host Hotels and Hawesko Holding

0.01

Correlation Coefficient

Host Hotels  Hawesko Holding

Significant diversification

The 3 months correlation between Host and Hawesko is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Hawesko Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawesko Holding AG and Host Hotels 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 Host Hotels Resorts are associated (or correlated) with Hawesko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawesko Holding AG has no effect on the direction of Host Hotels i.e., Host Hotels and Hawesko Holding go up and down completely randomly.

Pair Corralation between Host Hotels and Hawesko Holding

Assuming the 90 days horizon Host Hotels Resorts is expected to generate 0.69 times more return on investment than Hawesko Holding. However, Host Hotels Resorts is 1.44 times less risky than Hawesko Holding. It trades about -0.25 of its potential returns per unit of risk. Hawesko Holding AG is currently generating about -0.26 per unit of risk. If you would invest  1,720  in Host Hotels Resorts on October 26, 2024 and sell it today you would lose (80.00) from holding Host Hotels Resorts or give up 4.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Host Hotels Resorts  vs.  Hawesko Holding AG

Host Hotels Resorts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Host Hotels Resorts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Host Hotels is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Hawesko Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawesko Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hawesko Holding is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Host Hotels and Hawesko Holding

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

The idea behind Host Hotels Resorts and Hawesko Holding AG 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.