Correlation Between OneSpaWorld Holdings and Booking Holdings

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

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

Diversification Opportunities for OneSpaWorld Holdings and Booking Holdings

-0.19

Correlation Coefficient

OneSpaWorld Holdings  Booking Holdings

Good diversification

The 3 months correlation between OneSpaWorld and Booking is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding OneSpaWorld Holdings and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings and OneSpaWorld Holdings 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 OneSpaWorld Holdings are associated (or correlated) with Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of OneSpaWorld Holdings i.e., OneSpaWorld Holdings and Booking Holdings go up and down completely randomly.

Pair Corralation between OneSpaWorld Holdings and Booking Holdings

Considering the 90-day investment horizon OneSpaWorld Holdings is expected to generate 1.49 times more return on investment than Booking Holdings. However, OneSpaWorld Holdings is 1.49 times more volatile than Booking Holdings. It trades about 0.0 of its potential returns per unit of risk. Booking Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,950  in OneSpaWorld Holdings on December 1, 2024 and sell it today you would lose (42.00) from holding OneSpaWorld Holdings or give up 2.15% of portfolio value over 90 days.

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

OneSpaWorld Holdings  vs.  Booking Holdings

OneSpaWorld Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days OneSpaWorld Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, OneSpaWorld Holdings is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Booking Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Booking Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Booking Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with OneSpaWorld Holdings and Booking Holdings

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

The idea behind OneSpaWorld Holdings and Booking Holdings 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.