Correlation Between Ubisoft Entertainment and Covivio Hotels

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

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

Diversification Opportunities for Ubisoft Entertainment and Covivio Hotels

-0.15

Correlation Coefficient

Ubisoft Entertainment  Covivio Hotels

Good diversification

The 3 months correlation between Ubisoft and Covivio is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ubisoft Entertainment and Covivio Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio Hotels and Ubisoft Entertainment 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 Ubisoft Entertainment are associated (or correlated) with Covivio Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covivio Hotels has no effect on the direction of Ubisoft Entertainment i.e., Ubisoft Entertainment and Covivio Hotels go up and down completely randomly.

Pair Corralation between Ubisoft Entertainment and Covivio Hotels

Assuming the 90 days trading horizon Ubisoft Entertainment is expected to under-perform the Covivio Hotels. In addition to that, Ubisoft Entertainment is 2.31 times more volatile than Covivio Hotels. It trades about -0.01 of its total potential returns per unit of risk. Covivio Hotels is currently generating about 0.13 per unit of volatility. If you would invest  1,845  in Covivio Hotels on October 10, 2024 and sell it today you would earn a total of  195.00  from holding Covivio Hotels or generate 10.57% return on investment over 90 days.

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

Ubisoft Entertainment  vs.  Covivio Hotels

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Covivio Hotels

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Covivio Hotels are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Covivio Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ubisoft Entertainment and Covivio Hotels

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

The idea behind Ubisoft Entertainment and Covivio 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.