Correlation Between Hongkong and Marriott International

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

By analyzing existing cross correlation between The Hongkong and and Marriott International, you can compare the effects of market volatilities on Hongkong and Marriott International 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 Hongkong with a short position of Marriott International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongkong and Marriott International.

Diversification Opportunities for Hongkong and Marriott International

0.46

Correlation Coefficient

Hongkong  Marriott International

Very weak diversification

The 3 months correlation between Hongkong and Marriott is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding The Hongkong and and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International and Hongkong 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 The Hongkong and are associated (or correlated) with Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of Hongkong i.e., Hongkong and Marriott International go up and down completely randomly.

Pair Corralation between Hongkong and Marriott International

Assuming the 90 days horizon The Hongkong and is expected to generate 1.1 times more return on investment than Marriott International. However, Hongkong is 1.1 times more volatile than Marriott International. It trades about -0.05 of its potential returns per unit of risk. Marriott International is currently generating about -0.18 per unit of risk. If you would invest  74.00  in The Hongkong and on December 22, 2024 and sell it today you would lose (6.00) from holding The Hongkong and or give up 8.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

The Hongkong and  vs.  Marriott International

The Hongkong

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hongkong and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Marriott International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marriott International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hongkong and Marriott International

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

The idea behind The Hongkong and and Marriott International 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.