Correlation Between Team Internet and PPHE Hotel

Can any of the company-specific risk be diversified away by investing in both Team Internet and PPHE 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 Team Internet and PPHE Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Team Internet Group and PPHE Hotel Group, you can compare the effects of market volatilities on Team Internet and PPHE 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 Team Internet with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team Internet and PPHE Hotel.

Diversification Opportunities for Team Internet and PPHE Hotel

-0.32

Correlation Coefficient

Team Internet  PPHE Hotel

Very good diversification

The 3 months correlation between Team and PPHE is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Team Internet Group and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group and Team Internet 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 Team Internet Group are associated (or correlated) with PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of Team Internet i.e., Team Internet and PPHE Hotel go up and down completely randomly.

Pair Corralation between Team Internet and PPHE Hotel

Assuming the 90 days trading horizon Team Internet is expected to generate 6.02 times less return on investment than PPHE Hotel. In addition to that, Team Internet is 2.29 times more volatile than PPHE Hotel Group. It trades about 0.04 of its total potential returns per unit of risk. PPHE Hotel Group is currently generating about 0.57 per unit of volatility. If you would invest  130,500  in PPHE Hotel Group on October 9, 2024 and sell it today you would earn a total of  11,500  from holding PPHE Hotel Group or generate 8.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Team Internet Group  vs.  PPHE Hotel Group

Team Internet Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Team Internet Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PPHE Hotel Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, PPHE Hotel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Team Internet and PPHE Hotel

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

The idea behind Team Internet Group and PPHE Hotel Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.