Correlation Between REGAL HOTEL and Pandora AS

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

By analyzing existing cross correlation between REGAL HOTEL INTL and Pandora AS, you can compare the effects of market volatilities on REGAL HOTEL and Pandora AS 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 REGAL HOTEL with a short position of Pandora AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL HOTEL and Pandora AS.

Diversification Opportunities for REGAL HOTEL and Pandora AS

-0.58

Correlation Coefficient

REGAL HOTEL  Pandora AS

Excellent diversification

The 3 months correlation between REGAL and Pandora is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding REGAL HOTEL INTL and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora AS and REGAL HOTEL 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 REGAL HOTEL INTL are associated (or correlated) with Pandora AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora AS has no effect on the direction of REGAL HOTEL i.e., REGAL HOTEL and Pandora AS go up and down completely randomly.

Pair Corralation between REGAL HOTEL and Pandora AS

Assuming the 90 days trading horizon REGAL HOTEL INTL is expected to generate 2.57 times more return on investment than Pandora AS. However, REGAL HOTEL is 2.57 times more volatile than Pandora AS. It trades about 0.08 of its potential returns per unit of risk. Pandora AS is currently generating about 0.15 per unit of risk. If you would invest  28.00  in REGAL HOTEL INTL on October 10, 2024 and sell it today you would earn a total of  1.00  from holding REGAL HOTEL INTL or generate 3.57% return on investment over 90 days.

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

REGAL HOTEL INTL  vs.  Pandora AS

REGAL HOTEL INTL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REGAL HOTEL INTL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, REGAL HOTEL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pandora AS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pandora AS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REGAL HOTEL and Pandora AS

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

The idea behind REGAL HOTEL INTL and Pandora AS 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.