Correlation Between Target Hospitality and OneSpaWorld Holdings | TH vs. OSW

Correlation Between Target Hospitality and OneSpaWorld Holdings

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Can any of the company-specific risk be diversified away by investing in both Target Hospitality and OneSpaWorld Holdings 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 Target Hospitality and OneSpaWorld Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Hospitality Corp and OneSpaWorld Holdings, you can compare the effects of market volatilities on Target Hospitality and OneSpaWorld Holdings 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 Target Hospitality with a short position of OneSpaWorld Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Hospitality and OneSpaWorld Holdings.

Diversification Opportunities for Target Hospitality and OneSpaWorld Holdings

TargetOneSpaWorldDiversified AwayTargetOneSpaWorldDiversified Away100%
0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Target and OneSpaWorld is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Target Hospitality Corp and OneSpaWorld Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSpaWorld Holdings and Target Hospitality 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 Target Hospitality Corp are associated (or correlated) with OneSpaWorld Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSpaWorld Holdings has no effect on the direction of Target Hospitality i.e., Target Hospitality and OneSpaWorld Holdings go up and down completely randomly.

Pair Corralation between Target Hospitality and OneSpaWorld Holdings

Allowing for the 90-day total investment horizon Target Hospitality Corp is expected to under-perform the OneSpaWorld Holdings. In addition to that, Target Hospitality is 1.78 times more volatile than OneSpaWorld Holdings. It trades about -0.01 of its total potential returns per unit of risk. OneSpaWorld Holdings is currently generating about 0.08 per unit of volatility. If you would invest  929.00  in OneSpaWorld Holdings on September 20, 2024 and sell it today you would earn a total of  1,028  from holding OneSpaWorld Holdings or generate 110.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Target Hospitality Corp  vs.  OneSpaWorld Holdings

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-1001020
JavaScript chart by amCharts 3.21.15TH OSW
       Timeline  
Target Hospitality Corp 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Target Hospitality Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Target Hospitality is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec7.588.599.510
OneSpaWorld Holdings 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in OneSpaWorld Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, OneSpaWorld Holdings showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1616.51717.51818.51919.52020.5

Target Hospitality and OneSpaWorld Holdings Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.61-8.7-5.78-2.870.012.875.798.7111.63 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15TH OSW
       Returns  

Pair Trading with Target Hospitality and OneSpaWorld Holdings

The main advantage of trading using opposite Target Hospitality and OneSpaWorld Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Hospitality position performs unexpectedly, OneSpaWorld Holdings 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 OneSpaWorld Holdings will offset losses from the drop in OneSpaWorld Holdings' long position.
The idea behind Target Hospitality Corp and OneSpaWorld Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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