Correlation Between Hotel Majestic and Eutelsat Communications
Can any of the company-specific risk be diversified away by investing in both Hotel Majestic and Eutelsat Communications 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 Eutelsat Communications 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 Eutelsat Communications SA, you can compare the effects of market volatilities on Hotel Majestic and Eutelsat Communications 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 Eutelsat Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Majestic and Eutelsat Communications.
Diversification Opportunities for Hotel Majestic and Eutelsat Communications
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hotel and Eutelsat is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Majestic Cannes and Eutelsat Communications SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eutelsat Communications 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 Eutelsat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eutelsat Communications has no effect on the direction of Hotel Majestic i.e., Hotel Majestic and Eutelsat Communications go up and down completely randomly.
Pair Corralation between Hotel Majestic and Eutelsat Communications
Assuming the 90 days trading horizon Hotel Majestic is expected to generate 28.39 times less return on investment than Eutelsat Communications. But when comparing it to its historical volatility, Hotel Majestic Cannes is 15.17 times less risky than Eutelsat Communications. It trades about 0.06 of its potential returns per unit of risk. Eutelsat Communications SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 227.00 in Eutelsat Communications SA on December 30, 2024 and sell it today you would earn a total of 180.00 from holding Eutelsat Communications SA or generate 79.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hotel Majestic Cannes vs. Eutelsat Communications SA
Performance |
Timeline |
Hotel Majestic Cannes |
Eutelsat Communications |
Hotel Majestic and Eutelsat Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hotel Majestic and Eutelsat Communications
The main advantage of trading using opposite Hotel Majestic and Eutelsat Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Majestic position performs unexpectedly, Eutelsat Communications 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 Eutelsat Communications will offset losses from the drop in Eutelsat Communications' long position.Hotel Majestic vs. Linedata Services SA | Hotel Majestic vs. Air France KLM SA | Hotel Majestic vs. Entech SE SAS | Hotel Majestic vs. Mauna Kea Technologies |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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