Correlation Between INTERCONT HOTELS and LIFE +

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

By analyzing existing cross correlation between INTERCONT HOTELS and LIFE BANC SPLIT, you can compare the effects of market volatilities on INTERCONT HOTELS and LIFE + 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 INTERCONT HOTELS with a short position of LIFE +. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and LIFE +.

Diversification Opportunities for INTERCONT HOTELS and LIFE +

0.85

Correlation Coefficient

INTERCONT HOTELS  LIFE +

Very poor diversification

The 3 months correlation between INTERCONT and LIFE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and LIFE BANC SPLIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE BANC SPLIT and INTERCONT HOTELS 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 INTERCONT HOTELS are associated (or correlated) with LIFE +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE BANC SPLIT has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and LIFE + go up and down completely randomly.

Pair Corralation between INTERCONT HOTELS and LIFE +

Assuming the 90 days trading horizon INTERCONT HOTELS is expected to under-perform the LIFE +. But the stock apears to be less risky and, when comparing its historical volatility, INTERCONT HOTELS is 3.6 times less risky than LIFE +. The stock trades about -0.19 of its potential returns per unit of risk. The LIFE BANC SPLIT is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  615.00  in LIFE BANC SPLIT on October 9, 2024 and sell it today you would lose (25.00) from holding LIFE BANC SPLIT or give up 4.07% of portfolio value over 90 days.

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

INTERCONT HOTELS  vs.  LIFE BANC SPLIT

INTERCONT HOTELS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

LIFE BANC SPLIT

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LIFE BANC SPLIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LIFE + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERCONT HOTELS and LIFE +

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

The idea behind INTERCONT HOTELS and LIFE BANC SPLIT 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.