Correlation Between INTERCONT HOTELS and Datalogic SpA

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

By analyzing existing cross correlation between INTERCONT HOTELS and Datalogic SpA, you can compare the effects of market volatilities on INTERCONT HOTELS and Datalogic SpA 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 Datalogic SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and Datalogic SpA.

Diversification Opportunities for INTERCONT HOTELS and Datalogic SpA

0.03

Correlation Coefficient

INTERCONT HOTELS  Datalogic SpA

Significant diversification

The 3 months correlation between INTERCONT and Datalogic is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Datalogic SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datalogic SpA 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 Datalogic SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datalogic SpA has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Datalogic SpA go up and down completely randomly.

Pair Corralation between INTERCONT HOTELS and Datalogic SpA

Assuming the 90 days trading horizon INTERCONT HOTELS is expected to under-perform the Datalogic SpA. But the stock apears to be less risky and, when comparing its historical volatility, INTERCONT HOTELS is 1.44 times less risky than Datalogic SpA. The stock trades about -0.15 of its potential returns per unit of risk. The Datalogic SpA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  492.00  in Datalogic SpA on December 25, 2024 and sell it today you would lose (53.00) from holding Datalogic SpA or give up 10.77% of portfolio value over 90 days.

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

INTERCONT HOTELS  vs.  Datalogic SpA

INTERCONT HOTELS

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERCONT HOTELS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Datalogic SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Datalogic SpA 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.

Pair Trading with INTERCONT HOTELS and Datalogic SpA

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

The idea behind INTERCONT HOTELS and Datalogic SpA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.