Correlation Between PPHE Hotel and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and Vulcan Materials 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 PPHE Hotel and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE Hotel Group and Vulcan Materials Co, you can compare the effects of market volatilities on PPHE Hotel and Vulcan Materials 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 PPHE Hotel with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Vulcan Materials.
Diversification Opportunities for PPHE Hotel and Vulcan Materials
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between PPHE and Vulcan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and PPHE 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 PPHE Hotel Group are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Vulcan Materials go up and down completely randomly.
Pair Corralation between PPHE Hotel and Vulcan Materials
Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 0.92 times more return on investment than Vulcan Materials. However, PPHE Hotel Group is 1.08 times less risky than Vulcan Materials. It trades about 0.14 of its potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.04 per unit of risk. If you would invest 116,000 in PPHE Hotel Group on October 11, 2024 and sell it today you would earn a total of 18,000 from holding PPHE Hotel Group or generate 15.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
PPHE Hotel Group vs. Vulcan Materials Co
Performance |
Timeline |
PPHE Hotel Group |
Vulcan Materials |
PPHE Hotel and Vulcan Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PPHE Hotel and Vulcan Materials
The main advantage of trading using opposite PPHE Hotel and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.PPHE Hotel vs. Bell Food Group | PPHE Hotel vs. Axfood AB | PPHE Hotel vs. Chrysalis Investments | PPHE Hotel vs. Zurich Insurance Group |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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