Correlation Between Host Hotels and Intouch Holdings

Can any of the company-specific risk be diversified away by investing in both Host Hotels and Intouch Holdings 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 Intouch Holdings 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 Intouch Holdings PCL, you can compare the effects of market volatilities on Host Hotels and Intouch Holdings 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 Intouch Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Intouch Holdings.

Diversification Opportunities for Host Hotels and Intouch Holdings

-0.39

Correlation Coefficient

Host Hotels  Intouch Holdings

Very good diversification

The 3 months correlation between Host and Intouch is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Intouch Holdings PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intouch Holdings PCL 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 Intouch Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intouch Holdings PCL has no effect on the direction of Host Hotels i.e., Host Hotels and Intouch Holdings go up and down completely randomly.

Pair Corralation between Host Hotels and Intouch Holdings

Assuming the 90 days horizon Host Hotels is expected to generate 11.32 times less return on investment than Intouch Holdings. But when comparing it to its historical volatility, Host Hotels Resorts is 1.49 times less risky than Intouch Holdings. It trades about 0.03 of its potential returns per unit of risk. Intouch Holdings PCL is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Intouch Holdings PCL on October 21, 2024 and sell it today you would earn a total of  22.00  from holding Intouch Holdings PCL or generate 8.66% return on investment over 90 days.

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

Host Hotels Resorts  vs.  Intouch Holdings PCL

Host Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Host Hotels Resorts are ranked lower than 4 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Intouch Holdings PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intouch Holdings PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intouch Holdings 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 Intouch Holdings

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

The idea behind Host Hotels Resorts and Intouch Holdings PCL 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.