Correlation Between Soho House and LuxUrban Hotels

Can any of the company-specific risk be diversified away by investing in both Soho House and LuxUrban Hotels 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 Soho House and LuxUrban Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Soho House Co and LuxUrban Hotels, you can compare the effects of market volatilities on Soho House and LuxUrban Hotels 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 Soho House with a short position of LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soho House and LuxUrban Hotels.

Diversification Opportunities for Soho House and LuxUrban Hotels

0.0

Correlation Coefficient

Soho House  LuxUrban Hotels

Pay attention - limited upside

The 3 months correlation between Soho and LuxUrban is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Soho House Co and LuxUrban Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels and Soho House 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 Soho House Co are associated (or correlated) with LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels has no effect on the direction of Soho House i.e., Soho House and LuxUrban Hotels go up and down completely randomly.

Pair Corralation between Soho House and LuxUrban Hotels

If you would invest (100.00) in LuxUrban Hotels on December 19, 2024 and sell it today you would earn a total of  100.00  from holding LuxUrban Hotels or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Soho House Co  vs.  LuxUrban Hotels

Soho House

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soho House Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Soho House is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

LuxUrban Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days LuxUrban Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, LuxUrban Hotels is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Soho House and LuxUrban Hotels

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

The idea behind Soho House Co and LuxUrban Hotels 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.