Correlation Between Land and LH Hotel

Can any of the company-specific risk be diversified away by investing in both Land and LH Hotel 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 LH Hotel 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 LH Hotel Leasehold, you can compare the effects of market volatilities on Land and LH Hotel 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 LH Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Land and LH Hotel.

Diversification Opportunities for Land and LH Hotel

0.25

Correlation Coefficient

Land  LH Hotel

Modest diversification

The 3 months correlation between Land and LHHOTEL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and LH Hotel Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LH Hotel Leasehold 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 LH Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LH Hotel Leasehold has no effect on the direction of Land i.e., Land and LH Hotel go up and down completely randomly.

Pair Corralation between Land and LH Hotel

Assuming the 90 days trading horizon Land and Houses is expected to generate 53.23 times more return on investment than LH Hotel. However, Land is 53.23 times more volatile than LH Hotel Leasehold. It trades about 0.11 of its potential returns per unit of risk. LH Hotel Leasehold is currently generating about -0.03 per unit of risk. If you would invest  0.00  in Land and Houses on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Land and Houses or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Land and Houses  vs.  LH Hotel Leasehold

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.

LH Hotel Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LH Hotel Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, LH Hotel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Land and LH Hotel

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

The idea behind Land and Houses and LH Hotel Leasehold 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.