Correlation Between INTERCONT HOTELS and ENN Energy

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

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

Diversification Opportunities for INTERCONT HOTELS and ENN Energy

-0.28

Correlation Coefficient

INTERCONT HOTELS  ENN Energy

Very good diversification

The 3 months correlation between INTERCONT and ENN is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and ENN Energy go up and down completely randomly.

Pair Corralation between INTERCONT HOTELS and ENN Energy

Assuming the 90 days trading horizon INTERCONT HOTELS is expected to under-perform the ENN Energy. But the stock apears to be less risky and, when comparing its historical volatility, INTERCONT HOTELS is 1.55 times less risky than ENN Energy. The stock trades about -0.17 of its potential returns per unit of risk. The ENN Energy Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  675.00  in ENN Energy Holdings on December 27, 2024 and sell it today you would earn a total of  15.00  from holding ENN Energy Holdings or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

INTERCONT HOTELS  vs.  ENN Energy Holdings

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.

ENN Energy Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ENN Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTERCONT HOTELS and ENN Energy

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

The idea behind INTERCONT HOTELS and ENN Energy Holdings 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.