Correlation Between Hoteles Bestprice and Placoplatre

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

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

Diversification Opportunities for Hoteles Bestprice and Placoplatre

0.39

Correlation Coefficient

Hoteles Bestprice  Placoplatre

Weak diversification

The 3 months correlation between Hoteles and Placoplatre is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles Bestprice SA and Placoplatre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Placoplatre SA and Hoteles Bestprice 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 Hoteles Bestprice SA are associated (or correlated) with Placoplatre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Placoplatre SA has no effect on the direction of Hoteles Bestprice i.e., Hoteles Bestprice and Placoplatre go up and down completely randomly.

Pair Corralation between Hoteles Bestprice and Placoplatre

Assuming the 90 days trading horizon Hoteles Bestprice SA is expected to generate 1.16 times more return on investment than Placoplatre. However, Hoteles Bestprice is 1.16 times more volatile than Placoplatre SA. It trades about 0.04 of its potential returns per unit of risk. Placoplatre SA is currently generating about -0.03 per unit of risk. If you would invest  224.00  in Hoteles Bestprice SA on October 10, 2024 and sell it today you would earn a total of  76.00  from holding Hoteles Bestprice SA or generate 33.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	58.77%
Values	Daily Returns

Hoteles Bestprice SA  vs.  Placoplatre SA

Hoteles Bestprice

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoteles Bestprice SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Placoplatre SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Placoplatre SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Placoplatre may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hoteles Bestprice and Placoplatre

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

The idea behind Hoteles Bestprice SA and Placoplatre SA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..