Correlation Between NH Hoteles and Grupo Ecoener

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

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

Diversification Opportunities for NH Hoteles and Grupo Ecoener

0.72

Correlation Coefficient

NH Hoteles  Grupo Ecoener

Poor diversification

The 3 months correlation between NHH and Grupo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NH Hoteles and Grupo Ecoener SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Ecoener 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 Grupo Ecoener. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Ecoener SA has no effect on the direction of NH Hoteles i.e., NH Hoteles and Grupo Ecoener go up and down completely randomly.

Pair Corralation between NH Hoteles and Grupo Ecoener

Assuming the 90 days trading horizon NH Hoteles is expected to generate 1.4 times more return on investment than Grupo Ecoener. However, NH Hoteles is 1.4 times more volatile than Grupo Ecoener SA. It trades about 0.04 of its potential returns per unit of risk. Grupo Ecoener SA is currently generating about -0.06 per unit of risk. If you would invest  445.00  in NH Hoteles on September 12, 2024 and sell it today you would earn a total of  4.00  from holding NH Hoteles or generate 0.9% return on investment over 90 days.

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

NH Hoteles  vs.  Grupo Ecoener SA

NH Hoteles

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NH Hoteles are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, NH Hoteles may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grupo Ecoener SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Ecoener SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Grupo Ecoener exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NH Hoteles and Grupo Ecoener

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

The idea behind NH Hoteles and Grupo Ecoener 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.