Correlation Between HOTELEST and QUALITY BEVERAGES

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

By analyzing existing cross correlation between HOTELEST LTD and QUALITY BEVERAGES LTD, you can compare the effects of market volatilities on HOTELEST and QUALITY BEVERAGES 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 QUALITY BEVERAGES. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOTELEST and QUALITY BEVERAGES.

Diversification Opportunities for HOTELEST and QUALITY BEVERAGES

0.0

Correlation Coefficient

HOTELEST  QUALITY BEVERAGES

Pay attention - limited upside

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

Pair Corralation between HOTELEST and QUALITY BEVERAGES

If you would invest  1,075  in QUALITY BEVERAGES LTD on October 27, 2024 and sell it today you would earn a total of  215.00  from holding QUALITY BEVERAGES LTD or generate 20.0% return on investment over 90 days.

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

HOTELEST LTD  vs.  QUALITY BEVERAGES LTD

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

QUALITY BEVERAGES LTD

Risk-Adjusted Performance

10 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QUALITY BEVERAGES LTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, QUALITY BEVERAGES displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HOTELEST and QUALITY BEVERAGES

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

The idea behind HOTELEST LTD and QUALITY BEVERAGES LTD 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 Global Correlations module to find global opportunities by holding instruments from different markets.