Correlation Between Pyramisa Hotels and Medical Packaging

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

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

Diversification Opportunities for Pyramisa Hotels and Medical Packaging

0.55

Correlation Coefficient

Pyramisa Hotels  Medical Packaging

Very weak diversification

The 3 months correlation between Pyramisa and Medical is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pyramisa Hotels and Medical Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Packaging and Pyramisa Hotels 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 Pyramisa Hotels are associated (or correlated) with Medical Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Packaging has no effect on the direction of Pyramisa Hotels i.e., Pyramisa Hotels and Medical Packaging go up and down completely randomly.

Pair Corralation between Pyramisa Hotels and Medical Packaging

Assuming the 90 days trading horizon Pyramisa Hotels is expected to under-perform the Medical Packaging. But the stock apears to be less risky and, when comparing its historical volatility, Pyramisa Hotels is 1.11 times less risky than Medical Packaging. The stock trades about -0.17 of its potential returns per unit of risk. The Medical Packaging is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  126.00  in Medical Packaging on December 24, 2024 and sell it today you would lose (8.00) from holding Medical Packaging or give up 6.35% of portfolio value over 90 days.

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

Pyramisa Hotels  vs.  Medical Packaging

Pyramisa Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pyramisa Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Medical Packaging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medical Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental 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 Pyramisa Hotels and Medical Packaging

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

The idea behind Pyramisa Hotels and Medical Packaging 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.