Correlation Between Compania Hoteliera and SIF Hoteluri

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

Diversification Opportunities for Compania Hoteliera and SIF Hoteluri

0.0

Correlation Coefficient

Compania Hoteliera  SIF Hoteluri

Pay attention - limited upside

The 3 months correlation between Compania and SIF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compania Hoteliera InterContin and SIF Hoteluri SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIF Hoteluri 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 SIF Hoteluri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIF Hoteluri SA has no effect on the direction of Compania Hoteliera i.e., Compania Hoteliera and SIF Hoteluri go up and down completely randomly.

Pair Corralation between Compania Hoteliera and SIF Hoteluri

If you would invest  0.00  in SIF Hoteluri SA on October 22, 2024 and sell it today you would earn a total of  0.00  from holding SIF Hoteluri SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.94%
Values	Daily Returns

Compania Hoteliera InterContin  vs.  SIF Hoteluri SA

Compania Hoteliera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania Hoteliera InterContinental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Compania Hoteliera is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SIF Hoteluri SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIF Hoteluri SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SIF Hoteluri is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Compania Hoteliera and SIF Hoteluri

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

The idea behind Compania Hoteliera InterContinental and SIF Hoteluri 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.