Correlation Between Compania Hoteliera and GRUPUL INDUSTRIAL

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

Diversification Opportunities for Compania Hoteliera and GRUPUL INDUSTRIAL

0.57

Correlation Coefficient

Compania Hoteliera  GRUPUL INDUSTRIAL

Very weak diversification

The 3 months correlation between Compania and GRUPUL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Compania Hoteliera InterContin and GRUPUL INDUSTRIAL ELECTROCONTA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPUL INDUSTRIAL 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 GRUPUL INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPUL INDUSTRIAL has no effect on the direction of Compania Hoteliera i.e., Compania Hoteliera and GRUPUL INDUSTRIAL go up and down completely randomly.

Pair Corralation between Compania Hoteliera and GRUPUL INDUSTRIAL

Assuming the 90 days trading horizon Compania Hoteliera InterContinental is expected to generate 1.38 times more return on investment than GRUPUL INDUSTRIAL. However, Compania Hoteliera is 1.38 times more volatile than GRUPUL INDUSTRIAL ELECTROCONTACT. It trades about 0.04 of its potential returns per unit of risk. GRUPUL INDUSTRIAL ELECTROCONTACT is currently generating about 0.0 per unit of risk. If you would invest  23.00  in Compania Hoteliera InterContinental on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Compania Hoteliera InterContinental or generate 4.35% return on investment over 90 days.

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

Compania Hoteliera InterContin  vs.  GRUPUL INDUSTRIAL ELECTROCONTA

Compania Hoteliera

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Hoteliera InterContinental are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Compania Hoteliera may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GRUPUL INDUSTRIAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Compania Hoteliera and GRUPUL INDUSTRIAL

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

The idea behind Compania Hoteliera InterContinental and GRUPUL INDUSTRIAL ELECTROCONTACT 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.