Correlation Between REGAL HOTEL and Kunlun Energy

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

Diversification Opportunities for REGAL HOTEL and Kunlun Energy

-0.3

Correlation Coefficient

REGAL HOTEL  Kunlun Energy

Very good diversification

The 3 months correlation between REGAL and Kunlun is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding REGAL HOTEL INTL and Kunlun Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunlun Energy 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 Kunlun Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunlun Energy has no effect on the direction of REGAL HOTEL i.e., REGAL HOTEL and Kunlun Energy go up and down completely randomly.

Pair Corralation between REGAL HOTEL and Kunlun Energy

Assuming the 90 days trading horizon REGAL HOTEL INTL is expected to under-perform the Kunlun Energy. But the stock apears to be less risky and, when comparing its historical volatility, REGAL HOTEL INTL is 1.69 times less risky than Kunlun Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Kunlun Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Kunlun Energy on October 11, 2024 and sell it today you would earn a total of  70.00  from holding Kunlun Energy or generate 291.67% return on investment over 90 days.

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

REGAL HOTEL INTL  vs.  Kunlun Energy

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.

Kunlun Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kunlun Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Kunlun Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with REGAL HOTEL and Kunlun Energy

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

The idea behind REGAL HOTEL INTL and Kunlun Energy 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.