Correlation Between Tangerine Beach and Prime Lands

Can any of the company-specific risk be diversified away by investing in both Tangerine Beach and Prime Lands 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 Tangerine Beach and Prime Lands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tangerine Beach Hotels and Prime Lands Residencies, you can compare the effects of market volatilities on Tangerine Beach and Prime Lands 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 Tangerine Beach with a short position of Prime Lands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tangerine Beach and Prime Lands.

Diversification Opportunities for Tangerine Beach and Prime Lands

0.84

Correlation Coefficient

Tangerine Beach  Prime Lands

Very poor diversification

The 3 months correlation between Tangerine and Prime is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tangerine Beach Hotels and Prime Lands Residencies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Lands Residencies and Tangerine Beach 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 Tangerine Beach Hotels are associated (or correlated) with Prime Lands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Lands Residencies has no effect on the direction of Tangerine Beach i.e., Tangerine Beach and Prime Lands go up and down completely randomly.

Pair Corralation between Tangerine Beach and Prime Lands

Assuming the 90 days trading horizon Tangerine Beach Hotels is expected to under-perform the Prime Lands. But the stock apears to be less risky and, when comparing its historical volatility, Tangerine Beach Hotels is 1.04 times less risky than Prime Lands. The stock trades about -0.11 of its potential returns per unit of risk. The Prime Lands Residencies is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,220  in Prime Lands Residencies on December 27, 2024 and sell it today you would lose (20.00) from holding Prime Lands Residencies or give up 1.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	93.1%
Values	Daily Returns

Tangerine Beach Hotels  vs.  Prime Lands Residencies

Tangerine Beach Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tangerine Beach Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Prime Lands Residencies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prime Lands Residencies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Prime Lands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tangerine Beach and Prime Lands

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

The idea behind Tangerine Beach Hotels and Prime Lands Residencies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.