Correlation Between NH Hoteles and Cox ABG

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

By analyzing existing cross correlation between NH Hoteles and Cox ABG Group, you can compare the effects of market volatilities on NH Hoteles and Cox ABG 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 Cox ABG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Hoteles and Cox ABG.

Diversification Opportunities for NH Hoteles and Cox ABG

-0.26

Correlation Coefficient

NH Hoteles  Cox ABG

Very good diversification

The 3 months correlation between NHH and Cox is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding NH Hoteles and Cox ABG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cox ABG Group 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 Cox ABG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cox ABG Group has no effect on the direction of NH Hoteles i.e., NH Hoteles and Cox ABG go up and down completely randomly.

Pair Corralation between NH Hoteles and Cox ABG

Assuming the 90 days trading horizon NH Hoteles is expected to generate 0.13 times more return on investment than Cox ABG. However, NH Hoteles is 7.54 times less risky than Cox ABG. It trades about 0.06 of its potential returns per unit of risk. Cox ABG Group is currently generating about -0.06 per unit of risk. If you would invest  623.00  in NH Hoteles on December 19, 2024 and sell it today you would earn a total of  5.00  from holding NH Hoteles or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

NH Hoteles  vs.  Cox ABG Group

NH Hoteles

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NH Hoteles are ranked lower than 4 (%) 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.

Cox ABG Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cox ABG Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cox ABG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NH Hoteles and Cox ABG

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

The idea behind NH Hoteles and Cox ABG 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.