Correlation Between TRANSILVANIA INVESTMENTS and Compania Hoteliera

Can any of the company-specific risk be diversified away by investing in both TRANSILVANIA INVESTMENTS and Compania Hoteliera 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 TRANSILVANIA INVESTMENTS and Compania Hoteliera into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRANSILVANIA INVESTMENTS ALLIANCE and Compania Hoteliera InterContinental, you can compare the effects of market volatilities on TRANSILVANIA INVESTMENTS and Compania Hoteliera 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 TRANSILVANIA INVESTMENTS with a short position of Compania Hoteliera. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRANSILVANIA INVESTMENTS and Compania Hoteliera.

Diversification Opportunities for TRANSILVANIA INVESTMENTS and Compania Hoteliera

-0.03

Correlation Coefficient

TRANSILVANIA INVESTMENTS  Compania Hoteliera

Good diversification

The 3 months correlation between TRANSILVANIA and Compania is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding TRANSILVANIA INVESTMENTS ALLIA and Compania Hoteliera InterContin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Hoteliera and TRANSILVANIA INVESTMENTS 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 TRANSILVANIA INVESTMENTS ALLIANCE are associated (or correlated) with Compania Hoteliera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Hoteliera has no effect on the direction of TRANSILVANIA INVESTMENTS i.e., TRANSILVANIA INVESTMENTS and Compania Hoteliera go up and down completely randomly.

Pair Corralation between TRANSILVANIA INVESTMENTS and Compania Hoteliera

Assuming the 90 days trading horizon TRANSILVANIA INVESTMENTS ALLIANCE is expected to generate 1.69 times more return on investment than Compania Hoteliera. However, TRANSILVANIA INVESTMENTS is 1.69 times more volatile than Compania Hoteliera InterContinental. It trades about 0.1 of its potential returns per unit of risk. Compania Hoteliera InterContinental is currently generating about -0.26 per unit of risk. If you would invest  36.00  in TRANSILVANIA INVESTMENTS ALLIANCE on October 7, 2024 and sell it today you would earn a total of  1.00  from holding TRANSILVANIA INVESTMENTS ALLIANCE or generate 2.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

TRANSILVANIA INVESTMENTS ALLIA  vs.  Compania Hoteliera InterContin

TRANSILVANIA INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Compania Hoteliera

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TRANSILVANIA INVESTMENTS and Compania Hoteliera

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

The idea behind TRANSILVANIA INVESTMENTS ALLIANCE and Compania Hoteliera InterContinental 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.