Correlation Between REGAL HOTEL and Gelsenwasser

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

Diversification Opportunities for REGAL HOTEL and Gelsenwasser

-0.22

Correlation Coefficient

REGAL HOTEL  Gelsenwasser

Very good diversification

The 3 months correlation between REGAL and Gelsenwasser is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding REGAL HOTEL INTL and Gelsenwasser AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gelsenwasser AG 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 Gelsenwasser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gelsenwasser AG has no effect on the direction of REGAL HOTEL i.e., REGAL HOTEL and Gelsenwasser go up and down completely randomly.

Pair Corralation between REGAL HOTEL and Gelsenwasser

Assuming the 90 days trading horizon REGAL HOTEL INTL is expected to under-perform the Gelsenwasser. In addition to that, REGAL HOTEL is 1.39 times more volatile than Gelsenwasser AG. It trades about -0.18 of its total potential returns per unit of risk. Gelsenwasser AG is currently generating about 0.05 per unit of volatility. If you would invest  49,800  in Gelsenwasser AG on December 24, 2024 and sell it today you would earn a total of  2,700  from holding Gelsenwasser AG or generate 5.42% 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.  Gelsenwasser AG

REGAL HOTEL INTL

Risk-Adjusted Performance

Very Weak

Over the last 90 days REGAL HOTEL INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Gelsenwasser AG

Risk-Adjusted Performance

Insignificant

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

Pair Trading with REGAL HOTEL and Gelsenwasser

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

The idea behind REGAL HOTEL INTL and Gelsenwasser AG 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.