Correlation Between Hotel Majestic and BEBO Health
Can any of the company-specific risk be diversified away by investing in both Hotel Majestic and BEBO Health 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 BEBO Health 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 BEBO Health SA, you can compare the effects of market volatilities on Hotel Majestic and BEBO Health 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 BEBO Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Majestic and BEBO Health.
Diversification Opportunities for Hotel Majestic and BEBO Health
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hotel and BEBO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Majestic Cannes and BEBO Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEBO Health SA 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 BEBO Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEBO Health SA has no effect on the direction of Hotel Majestic i.e., Hotel Majestic and BEBO Health go up and down completely randomly.
Pair Corralation between Hotel Majestic and BEBO Health
Assuming the 90 days trading horizon Hotel Majestic Cannes is expected to generate 0.76 times more return on investment than BEBO Health. However, Hotel Majestic Cannes is 1.32 times less risky than BEBO Health. It trades about -0.01 of its potential returns per unit of risk. BEBO Health SA is currently generating about -0.12 per unit of risk. If you would invest 545,000 in Hotel Majestic Cannes on September 12, 2024 and sell it today you would lose (25,000) from holding Hotel Majestic Cannes or give up 4.59% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hotel Majestic Cannes vs. BEBO Health SA
Performance |
Timeline |
Hotel Majestic Cannes |
BEBO Health SA |
Hotel Majestic and BEBO Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hotel Majestic and BEBO Health
The main advantage of trading using opposite Hotel Majestic and BEBO Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Majestic position performs unexpectedly, BEBO Health 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 BEBO Health will offset losses from the drop in BEBO Health's long position.Hotel Majestic vs. Les Hotels Bav | Hotel Majestic vs. Groupe Partouche SA | Hotel Majestic vs. Centrale dAchat Franaise | Hotel Majestic vs. Manitou BF SA |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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