Correlation Between NH HOTEL and CANON MARKETING

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

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

Diversification Opportunities for NH HOTEL and CANON MARKETING

0.12

Correlation Coefficient

NH HOTEL  CANON MARKETING

Average diversification

The 3 months correlation between NH5 and CANON is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL GROUP and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP and NH HOTEL 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 NH HOTEL GROUP are associated (or correlated) with CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of NH HOTEL i.e., NH HOTEL and CANON MARKETING go up and down completely randomly.

Pair Corralation between NH HOTEL and CANON MARKETING

Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 0.65 times more return on investment than CANON MARKETING. However, NH HOTEL GROUP is 1.54 times less risky than CANON MARKETING. It trades about 0.01 of its potential returns per unit of risk. CANON MARKETING JP is currently generating about -0.02 per unit of risk. If you would invest  618.00  in NH HOTEL GROUP on December 19, 2024 and sell it today you would earn a total of  2.00  from holding NH HOTEL GROUP or generate 0.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

NH HOTEL GROUP  vs.  CANON MARKETING JP

NH HOTEL GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days NH HOTEL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NH HOTEL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CANON MARKETING JP

Risk-Adjusted Performance

Very Weak

Over the last 90 days CANON MARKETING JP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, CANON MARKETING is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NH HOTEL and CANON MARKETING

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

The idea behind NH HOTEL GROUP and CANON MARKETING JP 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.