Correlation Between RTL Group and MIRAMAR HOTEL

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

By analyzing existing cross correlation between RTL Group SA and MIRAMAR HOTEL INV, you can compare the effects of market volatilities on RTL Group and MIRAMAR HOTEL 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 RTL Group with a short position of MIRAMAR HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of RTL Group and MIRAMAR HOTEL.

Diversification Opportunities for RTL Group and MIRAMAR HOTEL

-0.3

Correlation Coefficient

RTL Group  MIRAMAR HOTEL

Very good diversification

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

Pair Corralation between RTL Group and MIRAMAR HOTEL

Assuming the 90 days trading horizon RTL Group SA is expected to under-perform the MIRAMAR HOTEL. But the stock apears to be less risky and, when comparing its historical volatility, RTL Group SA is 1.69 times less risky than MIRAMAR HOTEL. The stock trades about -0.11 of its potential returns per unit of risk. The MIRAMAR HOTEL INV is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  87.00  in MIRAMAR HOTEL INV on September 5, 2024 and sell it today you would earn a total of  25.00  from holding MIRAMAR HOTEL INV or generate 28.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

RTL Group SA  vs.  MIRAMAR HOTEL INV

RTL Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MIRAMAR HOTEL INV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MIRAMAR HOTEL INV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, MIRAMAR HOTEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RTL Group and MIRAMAR HOTEL

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

The idea behind RTL Group SA and MIRAMAR HOTEL INV 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.