Correlation Between 694308KH9 and LuxUrban Hotels

Can any of the company-specific risk be diversified away by investing in both 694308KH9 and LuxUrban 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 694308KH9 and LuxUrban Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PCG 675 15 JAN 53 and LuxUrban Hotels 1300, you can compare the effects of market volatilities on 694308KH9 and LuxUrban 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 694308KH9 with a short position of LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of 694308KH9 and LuxUrban Hotels.

Diversification Opportunities for 694308KH9 and LuxUrban Hotels

-0.32

Correlation Coefficient

694308KH9  LuxUrban Hotels

Very good diversification

The 3 months correlation between 694308KH9 and LuxUrban is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding PCG 675 15 JAN 53 and LuxUrban Hotels 1300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels 1300 and 694308KH9 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 PCG 675 15 JAN 53 are associated (or correlated) with LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels 1300 has no effect on the direction of 694308KH9 i.e., 694308KH9 and LuxUrban Hotels go up and down completely randomly.

Pair Corralation between 694308KH9 and LuxUrban Hotels

Assuming the 90 days trading horizon PCG 675 15 JAN 53 is expected to under-perform the LuxUrban Hotels. But the bond apears to be less risky and, when comparing its historical volatility, PCG 675 15 JAN 53 is 4.74 times less risky than LuxUrban Hotels. The bond trades about -0.11 of its potential returns per unit of risk. The LuxUrban Hotels 1300 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,463  in LuxUrban Hotels 1300 on October 6, 2024 and sell it today you would earn a total of  30.00  from holding LuxUrban Hotels 1300 or generate 2.05% return on investment over 90 days.

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

PCG 675 15 JAN 53  vs.  LuxUrban Hotels 1300

PCG 675 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 675 15 JAN 53 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PCG 675 15 JAN 53 investors.

LuxUrban Hotels 1300

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LuxUrban Hotels 1300 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, LuxUrban Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 694308KH9 and LuxUrban Hotels

The main advantage of trading using opposite 694308KH9 and LuxUrban Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 694308KH9 position performs unexpectedly, LuxUrban 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 LuxUrban Hotels will offset losses from the drop in LuxUrban Hotels' long position.

The idea behind PCG 675 15 JAN 53 and LuxUrban Hotels 1300 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 Global Correlations module to find global opportunities by holding instruments from different markets.