Correlation Between Ströer SE and REGAL HOTEL

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

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

Diversification Opportunities for Ströer SE and REGAL HOTEL

-0.28

Correlation Coefficient

Ströer SE  REGAL HOTEL

Very good diversification

The 3 months correlation between Ströer and REGAL is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Strer SE Co and REGAL HOTEL INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL HOTEL INTL and Ströer SE 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 Strer SE Co are associated (or correlated) with REGAL HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL HOTEL INTL has no effect on the direction of Ströer SE i.e., Ströer SE and REGAL HOTEL go up and down completely randomly.

Pair Corralation between Ströer SE and REGAL HOTEL

Assuming the 90 days trading horizon Strer SE Co is expected to generate 1.09 times more return on investment than REGAL HOTEL. However, Ströer SE is 1.09 times more volatile than REGAL HOTEL INTL. It trades about 0.13 of its potential returns per unit of risk. REGAL HOTEL INTL is currently generating about -0.19 per unit of risk. If you would invest  4,624  in Strer SE Co on December 22, 2024 and sell it today you would earn a total of  1,106  from holding Strer SE Co or generate 23.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Strer SE Co  vs.  REGAL HOTEL INTL

Ströer SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strer SE Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Ströer SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Ströer SE and REGAL HOTEL

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

The idea behind Strer SE Co and REGAL HOTEL INTL 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.