Correlation Between PM Capital and Event Hospitality

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

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

Diversification Opportunities for PM Capital and Event Hospitality

0.29

Correlation Coefficient

PM Capital  Event Hospitality

Modest diversification

The 3 months correlation between PGF and Event is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Event Hospitality and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Event Hospitality and PM Capital 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 PM Capital Global are associated (or correlated) with Event Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Event Hospitality has no effect on the direction of PM Capital i.e., PM Capital and Event Hospitality go up and down completely randomly.

Pair Corralation between PM Capital and Event Hospitality

Assuming the 90 days trading horizon PM Capital is expected to generate 4.82 times less return on investment than Event Hospitality. But when comparing it to its historical volatility, PM Capital Global is 1.66 times less risky than Event Hospitality. It trades about 0.05 of its potential returns per unit of risk. Event Hospitality and is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,039  in Event Hospitality and on September 13, 2024 and sell it today you would earn a total of  151.00  from holding Event Hospitality and or generate 14.53% return on investment over 90 days.

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

PM Capital Global  vs.  Event Hospitality and

PM Capital Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PM Capital Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PM Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Event Hospitality

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Event Hospitality and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Event Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PM Capital and Event Hospitality

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

The idea behind PM Capital Global and Event Hospitality and 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.