Correlation Between LuxUrban Hotels and Intergroup

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

By analyzing existing cross correlation between LuxUrban Hotels and The Intergroup, you can compare the effects of market volatilities on LuxUrban Hotels and Intergroup 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 LuxUrban Hotels with a short position of Intergroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Intergroup.

Diversification Opportunities for LuxUrban Hotels and Intergroup

0.67

Correlation Coefficient

LuxUrban Hotels  Intergroup

Poor diversification

The 3 months correlation between LuxUrban and Intergroup is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels and The Intergroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intergroup and LuxUrban 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 LuxUrban Hotels are associated (or correlated) with Intergroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intergroup has no effect on the direction of LuxUrban Hotels i.e., LuxUrban Hotels and Intergroup go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Intergroup

Given the investment horizon of 90 days LuxUrban Hotels is expected to under-perform the Intergroup. In addition to that, LuxUrban Hotels is 4.01 times more volatile than The Intergroup. It trades about -0.28 of its total potential returns per unit of risk. The Intergroup is currently generating about -0.11 per unit of volatility. If you would invest  1,690  in The Intergroup on September 14, 2024 and sell it today you would lose (280.00) from holding The Intergroup or give up 16.57% of portfolio value over 90 days.

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

LuxUrban Hotels  vs.  The Intergroup

LuxUrban Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Intergroup

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Intergroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with LuxUrban Hotels and Intergroup

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

The idea behind LuxUrban Hotels and The Intergroup 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.