Correlation Between Morgan Stanley and PPHE HOTEL

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

By analyzing existing cross correlation between Morgan Stanley Direct and PPHE HOTEL GROUP, you can compare the effects of market volatilities on Morgan Stanley and PPHE HOTEL 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 Morgan Stanley with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and PPHE HOTEL.

Diversification Opportunities for Morgan Stanley and PPHE HOTEL

0.16

Correlation Coefficient

Morgan Stanley  PPHE HOTEL

Average diversification

The 3 months correlation between Morgan and PPHE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and Morgan Stanley 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 Morgan Stanley Direct are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and PPHE HOTEL go up and down completely randomly.

Pair Corralation between Morgan Stanley and PPHE HOTEL

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.28 times less return on investment than PPHE HOTEL. In addition to that, Morgan Stanley is 1.01 times more volatile than PPHE HOTEL GROUP. It trades about 0.04 of its total potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.05 per unit of volatility. If you would invest  1,215  in PPHE HOTEL GROUP on September 14, 2024 and sell it today you would earn a total of  375.00  from holding PPHE HOTEL GROUP or generate 30.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	55.97%
Values	Daily Returns

Morgan Stanley Direct  vs.  PPHE HOTEL GROUP

Morgan Stanley Direct

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PPHE HOTEL GROUP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, PPHE HOTEL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Morgan Stanley and PPHE HOTEL

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

The idea behind Morgan Stanley Direct and PPHE HOTEL GROUP 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.