Correlation Between Land and Grande Hospitality

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

By analyzing existing cross correlation between Land and Houses and Grande Hospitality Real, you can compare the effects of market volatilities on Land and Grande Hospitality 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 Land with a short position of Grande Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Land and Grande Hospitality.

Diversification Opportunities for Land and Grande Hospitality

0.01

Correlation Coefficient

Land  Grande Hospitality

Significant diversification

The 3 months correlation between Land and Grande is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and Grande Hospitality Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Hospitality Real and Land 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 Land and Houses are associated (or correlated) with Grande Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Hospitality Real has no effect on the direction of Land i.e., Land and Grande Hospitality go up and down completely randomly.

Pair Corralation between Land and Grande Hospitality

Assuming the 90 days trading horizon Land and Houses is expected to generate 116.15 times more return on investment than Grande Hospitality. However, Land is 116.15 times more volatile than Grande Hospitality Real. It trades about 0.11 of its potential returns per unit of risk. Grande Hospitality Real is currently generating about -0.01 per unit of risk. If you would invest  530.00  in Land and Houses on August 31, 2024 and sell it today you would earn a total of  15.00  from holding Land and Houses or generate 2.83% return on investment over 90 days.

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

Land and Houses  vs.  Grande Hospitality Real

Land and Houses

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Land and Houses are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Land disclosed solid returns over the last few months and may actually be approaching a breakup point.

Grande Hospitality Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Hospitality Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grande Hospitality is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Land and Grande Hospitality

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

The idea behind Land and Houses and Grande Hospitality Real 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.