Correlation Between Citrus Leisure and Browns Beach

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

By analyzing existing cross correlation between Citrus Leisure PLC and Browns Beach Hotels, you can compare the effects of market volatilities on Citrus Leisure and Browns Beach 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 Citrus Leisure with a short position of Browns Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citrus Leisure and Browns Beach.

Diversification Opportunities for Citrus Leisure and Browns Beach

-0.36

Correlation Coefficient

Citrus Leisure  Browns Beach

Very good diversification

The 3 months correlation between Citrus and Browns is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citrus Leisure PLC and Browns Beach Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Browns Beach Hotels and Citrus Leisure 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 Citrus Leisure PLC are associated (or correlated) with Browns Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Browns Beach Hotels has no effect on the direction of Citrus Leisure i.e., Citrus Leisure and Browns Beach go up and down completely randomly.

Pair Corralation between Citrus Leisure and Browns Beach

Assuming the 90 days trading horizon Citrus Leisure PLC is expected to under-perform the Browns Beach. But the stock apears to be less risky and, when comparing its historical volatility, Citrus Leisure PLC is 1.89 times less risky than Browns Beach. The stock trades about -0.11 of its potential returns per unit of risk. The Browns Beach Hotels is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,710  in Browns Beach Hotels on October 10, 2024 and sell it today you would earn a total of  130.00  from holding Browns Beach Hotels or generate 7.6% return on investment over 90 days.

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

Citrus Leisure PLC  vs.  Browns Beach Hotels

Citrus Leisure PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citrus Leisure PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Browns Beach Hotels

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Browns Beach Hotels are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Browns Beach sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citrus Leisure and Browns Beach

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

The idea behind Citrus Leisure PLC and Browns Beach Hotels 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.