Correlation Between Hotel Property and Remsense Technologies

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

By analyzing existing cross correlation between Hotel Property Investments and Remsense Technologies, you can compare the effects of market volatilities on Hotel Property and Remsense Technologies 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 Hotel Property with a short position of Remsense Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Property and Remsense Technologies.

Diversification Opportunities for Hotel Property and Remsense Technologies

-0.33

Correlation Coefficient

Hotel Property  Remsense Technologies

Very good diversification

The 3 months correlation between Hotel and Remsense is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Property Investments and Remsense Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remsense Technologies and Hotel Property 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 Hotel Property Investments are associated (or correlated) with Remsense Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remsense Technologies has no effect on the direction of Hotel Property i.e., Hotel Property and Remsense Technologies go up and down completely randomly.

Pair Corralation between Hotel Property and Remsense Technologies

Assuming the 90 days trading horizon Hotel Property is expected to generate 1.06 times less return on investment than Remsense Technologies. But when comparing it to its historical volatility, Hotel Property Investments is 5.1 times less risky than Remsense Technologies. It trades about 0.06 of its potential returns per unit of risk. Remsense Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6.20  in Remsense Technologies on October 22, 2024 and sell it today you would lose (3.00) from holding Remsense Technologies or give up 48.39% of portfolio value over 90 days.

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

Hotel Property Investments  vs.  Remsense Technologies

Hotel Property Inves

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Property Investments are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Hotel Property may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Remsense Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Remsense Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Remsense Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hotel Property and Remsense Technologies

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

The idea behind Hotel Property Investments and Remsense Technologies 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.