Correlation Between MULTI CHEM and Xenia Hotels

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

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

Diversification Opportunities for MULTI CHEM and Xenia Hotels

0.25

Correlation Coefficient

MULTI CHEM  Xenia Hotels

Modest diversification

The 3 months correlation between MULTI and Xenia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MULTI CHEM LTD and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts and MULTI CHEM 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 MULTI CHEM LTD are associated (or correlated) with Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of MULTI CHEM i.e., MULTI CHEM and Xenia Hotels go up and down completely randomly.

Pair Corralation between MULTI CHEM and Xenia Hotels

Assuming the 90 days trading horizon MULTI CHEM is expected to generate 1.25 times less return on investment than Xenia Hotels. In addition to that, MULTI CHEM is 1.21 times more volatile than Xenia Hotels Resorts. It trades about 0.03 of its total potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.04 per unit of volatility. If you would invest  1,358  in Xenia Hotels Resorts on October 7, 2024 and sell it today you would earn a total of  62.00  from holding Xenia Hotels Resorts or generate 4.57% return on investment over 90 days.

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

MULTI CHEM LTD  vs.  Xenia Hotels Resorts

MULTI CHEM LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MULTI CHEM LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MULTI CHEM is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Xenia Hotels Resorts

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Xenia Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MULTI CHEM and Xenia Hotels

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

The idea behind MULTI CHEM LTD and Xenia Hotels Resorts 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 Stocks Directory module to find actively traded stocks across global markets.