Correlation Between HOTELEST and CONSTANCE HOTELS

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

By analyzing existing cross correlation between HOTELEST LTD and CONSTANCE HOTELS SERVICES, you can compare the effects of market volatilities on HOTELEST and CONSTANCE HOTELS 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 HOTELEST with a short position of CONSTANCE HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOTELEST and CONSTANCE HOTELS.

Diversification Opportunities for HOTELEST and CONSTANCE HOTELS

0.0

Correlation Coefficient

HOTELEST  CONSTANCE HOTELS

Pay attention - limited upside

The 3 months correlation between HOTELEST and CONSTANCE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HOTELEST LTD and CONSTANCE HOTELS SERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTANCE HOTELS SERVICES and HOTELEST 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 HOTELEST LTD are associated (or correlated) with CONSTANCE HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTANCE HOTELS SERVICES has no effect on the direction of HOTELEST i.e., HOTELEST and CONSTANCE HOTELS go up and down completely randomly.

Pair Corralation between HOTELEST and CONSTANCE HOTELS

If you would invest  1,900  in CONSTANCE HOTELS SERVICES on October 25, 2024 and sell it today you would earn a total of  0.00  from holding CONSTANCE HOTELS SERVICES or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

HOTELEST LTD  vs.  CONSTANCE HOTELS SERVICES

HOTELEST LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOTELEST LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, HOTELEST is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CONSTANCE HOTELS SERVICES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTANCE HOTELS SERVICES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CONSTANCE HOTELS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HOTELEST and CONSTANCE HOTELS

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

The idea behind HOTELEST LTD and CONSTANCE HOTELS SERVICES 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.