Correlation Between Pebblebrook Hotel and Hua Hong

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

By analyzing existing cross correlation between Pebblebrook Hotel Trust and Hua Hong Semiconductor, you can compare the effects of market volatilities on Pebblebrook Hotel and Hua Hong 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 Pebblebrook Hotel with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pebblebrook Hotel and Hua Hong.

Diversification Opportunities for Pebblebrook Hotel and Hua Hong

-0.34

Correlation Coefficient

Pebblebrook Hotel  Hua Hong

Very good diversification

The 3 months correlation between Pebblebrook and Hua is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pebblebrook Hotel Trust and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and Pebblebrook 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 Pebblebrook Hotel Trust are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of Pebblebrook Hotel i.e., Pebblebrook Hotel and Hua Hong go up and down completely randomly.

Pair Corralation between Pebblebrook Hotel and Hua Hong

Assuming the 90 days trading horizon Pebblebrook Hotel Trust is expected to generate 0.62 times more return on investment than Hua Hong. However, Pebblebrook Hotel Trust is 1.62 times less risky than Hua Hong. It trades about 0.09 of its potential returns per unit of risk. Hua Hong Semiconductor is currently generating about -0.06 per unit of risk. If you would invest  1,199  in Pebblebrook Hotel Trust on October 9, 2024 and sell it today you would earn a total of  81.00  from holding Pebblebrook Hotel Trust or generate 6.76% return on investment over 90 days.

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

Pebblebrook Hotel Trust  vs.  Hua Hong Semiconductor

Pebblebrook Hotel Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pebblebrook Hotel Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pebblebrook Hotel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hua Hong Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hua Hong Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Pebblebrook Hotel and Hua Hong

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

The idea behind Pebblebrook Hotel Trust and Hua Hong Semiconductor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.