Correlation Between DR Horton and PPHE HOTEL

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Can any of the company-specific risk be diversified away by investing in both DR Horton and PPHE HOTEL 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 DR Horton and PPHE HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DR Horton and PPHE HOTEL GROUP, you can compare the effects of market volatilities on DR Horton and PPHE HOTEL 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 DR Horton with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DR Horton and PPHE HOTEL.

Diversification Opportunities for DR Horton and PPHE HOTEL

HO2PPHEDiversified AwayHO2PPHEDiversified Away100%
-0.8
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between HO2 and PPHE is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding DR Horton and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and DR Horton 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 DR Horton are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of DR Horton i.e., DR Horton and PPHE HOTEL go up and down completely randomly.

Pair Corralation between DR Horton and PPHE HOTEL

Assuming the 90 days horizon DR Horton is expected to under-perform the PPHE HOTEL. In addition to that, DR Horton is 1.49 times more volatile than PPHE HOTEL GROUP. It trades about -0.12 of its total potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.08 per unit of volatility. If you would invest  1,410  in PPHE HOTEL GROUP on October 21, 2024 and sell it today you would earn a total of  110.00  from holding PPHE HOTEL GROUP or generate 7.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

DR Horton  vs.  PPHE HOTEL GROUP

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -20-1001020
JavaScript chart by amCharts 3.21.15HO2 32P
       Timeline  
DR Horton 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DR Horton has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan130140150160170
PPHE HOTEL GROUP 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, PPHE HOTEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1414.51515.51616.517

DR Horton and PPHE HOTEL Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.5-3.37-2.24-1.110.01.032.083.134.18 0.040.060.080.100.12
JavaScript chart by amCharts 3.21.15HO2 32P
       Returns  

Pair Trading with DR Horton and PPHE HOTEL

The main advantage of trading using opposite DR Horton and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DR Horton position performs unexpectedly, PPHE HOTEL 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.
The idea behind DR Horton and PPHE HOTEL 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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