Correlation Between NH Hoteles and Aena SA

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

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

Diversification Opportunities for NH Hoteles and Aena SA

0.48

Correlation Coefficient

NH Hoteles  Aena SA

Very weak diversification

The 3 months correlation between NHH and Aena is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NH Hoteles and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA and NH Hoteles 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 Hoteles are associated (or correlated) with Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of NH Hoteles i.e., NH Hoteles and Aena SA go up and down completely randomly.

Pair Corralation between NH Hoteles and Aena SA

Assuming the 90 days trading horizon NH Hoteles is expected to generate 59.41 times less return on investment than Aena SA. But when comparing it to its historical volatility, NH Hoteles is 5.33 times less risky than Aena SA. It trades about 0.01 of its potential returns per unit of risk. Aena SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  19,910  in Aena SA on December 29, 2024 and sell it today you would earn a total of  2,070  from holding Aena SA or generate 10.4% return on investment over 90 days.

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

NH Hoteles  vs.  Aena SA

NH Hoteles

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NH Hoteles are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, NH Hoteles is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aena SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Aena SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NH Hoteles and Aena SA

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

The idea behind NH Hoteles and Aena SA 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.