Correlation Between PPHE Hotel and Bioventix

Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and Bioventix 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 Bioventix 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 Bioventix, you can compare the effects of market volatilities on PPHE Hotel and Bioventix 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 Bioventix. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Bioventix.

Diversification Opportunities for PPHE Hotel and Bioventix

-0.63

Correlation Coefficient

PPHE Hotel  Bioventix

Excellent diversification

The 3 months correlation between PPHE and Bioventix is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Bioventix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioventix 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 Bioventix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioventix has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Bioventix go up and down completely randomly.

Pair Corralation between PPHE Hotel and Bioventix

Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 0.74 times more return on investment than Bioventix. However, PPHE Hotel Group is 1.35 times less risky than Bioventix. It trades about 0.05 of its potential returns per unit of risk. Bioventix is currently generating about -0.08 per unit of risk. If you would invest  131,206  in PPHE Hotel Group on October 8, 2024 and sell it today you would earn a total of  10,294  from holding PPHE Hotel Group or generate 7.85% return on investment over 90 days.

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

PPHE Hotel Group  vs.  Bioventix

PPHE Hotel Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, PPHE Hotel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bioventix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioventix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PPHE Hotel and Bioventix

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

The idea behind PPHE Hotel Group and Bioventix 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.