Correlation Between Compania Hoteliera and Bermas SA

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

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

Diversification Opportunities for Compania Hoteliera and Bermas SA

-0.16

Correlation Coefficient

Compania Hoteliera  Bermas SA

Good diversification

The 3 months correlation between Compania and Bermas is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Compania Hoteliera InterContin and Bermas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bermas SA and Compania Hoteliera 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 Compania Hoteliera InterContinental are associated (or correlated) with Bermas SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bermas SA has no effect on the direction of Compania Hoteliera i.e., Compania Hoteliera and Bermas SA go up and down completely randomly.

Pair Corralation between Compania Hoteliera and Bermas SA

Assuming the 90 days trading horizon Compania Hoteliera is expected to generate 3.89 times less return on investment than Bermas SA. In addition to that, Compania Hoteliera is 1.42 times more volatile than Bermas SA. It trades about 0.03 of its total potential returns per unit of risk. Bermas SA is currently generating about 0.15 per unit of volatility. If you would invest  272.00  in Bermas SA on September 12, 2024 and sell it today you would earn a total of  34.00  from holding Bermas SA or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Compania Hoteliera InterContin  vs.  Bermas SA

Compania Hoteliera

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Hoteliera InterContinental are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Compania Hoteliera displayed solid returns over the last few months and may actually be approaching a breakup point.

Bermas SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bermas SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Bermas SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Compania Hoteliera and Bermas SA

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

The idea behind Compania Hoteliera InterContinental and Bermas SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.