Correlation Between PPHE Hotel and GlobalData PLC

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

Diversification Opportunities for PPHE Hotel and GlobalData PLC

0.07

Correlation Coefficient

PPHE Hotel  GlobalData PLC

Significant diversification

The 3 months correlation between PPHE and GlobalData is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and GlobalData PLC go up and down completely randomly.

Pair Corralation between PPHE Hotel and GlobalData PLC

Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 0.78 times more return on investment than GlobalData PLC. However, PPHE Hotel Group is 1.27 times less risky than GlobalData PLC. It trades about -0.02 of its potential returns per unit of risk. GlobalData PLC is currently generating about -0.07 per unit of risk. If you would invest  140,084  in PPHE Hotel Group on September 13, 2024 and sell it today you would lose (9,084) from holding PPHE Hotel Group or give up 6.48% of portfolio value over 90 days.

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

PPHE Hotel Group  vs.  GlobalData PLC

PPHE Hotel Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PPHE Hotel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

GlobalData PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalData PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PPHE Hotel and GlobalData PLC

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

The idea behind PPHE Hotel Group and GlobalData PLC 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.