Correlation Between Promateris and Turism Hotelur

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

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

Diversification Opportunities for Promateris and Turism Hotelur

0.12

Correlation Coefficient

Promateris  Turism Hotelur

Average diversification

The 3 months correlation between Promateris and Turism is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Promateris SA and Turism Hotelur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turism Hotelur and Promateris 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 Promateris SA are associated (or correlated) with Turism Hotelur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turism Hotelur has no effect on the direction of Promateris i.e., Promateris and Turism Hotelur go up and down completely randomly.

Pair Corralation between Promateris and Turism Hotelur

Assuming the 90 days trading horizon Promateris SA is expected to generate 1.85 times more return on investment than Turism Hotelur. However, Promateris is 1.85 times more volatile than Turism Hotelur. It trades about 0.04 of its potential returns per unit of risk. Turism Hotelur is currently generating about -0.12 per unit of risk. If you would invest  660.00  in Promateris SA on October 9, 2024 and sell it today you would earn a total of  10.00  from holding Promateris SA or generate 1.52% return on investment over 90 days.

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

Promateris SA  vs.  Turism Hotelur

Promateris SA

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Promateris SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating essential indicators, Promateris may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Turism Hotelur

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Turism Hotelur has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Turism Hotelur may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Promateris and Turism Hotelur

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

The idea behind Promateris SA and Turism Hotelur 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.