Correlation Between Hotel Majestic and Aures Technologies

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

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

Diversification Opportunities for Hotel Majestic and Aures Technologies

0.3

Correlation Coefficient

Hotel Majestic  Aures Technologies

Weak diversification

The 3 months correlation between Hotel and Aures is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Majestic Cannes and Aures Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aures Technologies and Hotel Majestic 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 Hotel Majestic Cannes are associated (or correlated) with Aures Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aures Technologies has no effect on the direction of Hotel Majestic i.e., Hotel Majestic and Aures Technologies go up and down completely randomly.

Pair Corralation between Hotel Majestic and Aures Technologies

Assuming the 90 days trading horizon Hotel Majestic Cannes is expected to generate 5.91 times more return on investment than Aures Technologies. However, Hotel Majestic is 5.91 times more volatile than Aures Technologies SA. It trades about 0.08 of its potential returns per unit of risk. Aures Technologies SA is currently generating about 0.02 per unit of risk. If you would invest  520,000  in Hotel Majestic Cannes on October 25, 2024 and sell it today you would earn a total of  30,000  from holding Hotel Majestic Cannes or generate 5.77% return on investment over 90 days.

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

Hotel Majestic Cannes  vs.  Aures Technologies SA

Hotel Majestic Cannes

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Majestic Cannes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hotel Majestic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aures Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aures Technologies SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Aures Technologies is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hotel Majestic and Aures Technologies

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

The idea behind Hotel Majestic Cannes and Aures Technologies 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.