Correlation Between Uzinexport and Compania Hoteliera

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

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

Diversification Opportunities for Uzinexport and Compania Hoteliera

-0.19

Correlation Coefficient

Uzinexport  Compania Hoteliera

Good diversification

The 3 months correlation between Uzinexport and Compania is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Uzinexport SA and Compania Hoteliera InterContin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Hoteliera and Uzinexport 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 Uzinexport SA 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 Uzinexport i.e., Uzinexport and Compania Hoteliera go up and down completely randomly.

Pair Corralation between Uzinexport and Compania Hoteliera

Assuming the 90 days trading horizon Uzinexport SA is expected to generate 2.57 times more return on investment than Compania Hoteliera. However, Uzinexport is 2.57 times more volatile than Compania Hoteliera InterContinental. It trades about 0.04 of its potential returns per unit of risk. Compania Hoteliera InterContinental is currently generating about 0.01 per unit of risk. If you would invest  50.00  in Uzinexport SA on December 25, 2024 and sell it today you would earn a total of  2.00  from holding Uzinexport SA or generate 4.0% return on investment over 90 days.

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

Uzinexport SA  vs.  Compania Hoteliera InterContin

Uzinexport SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uzinexport SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Uzinexport displayed solid returns over the last few months and may actually be approaching a breakup point.

Compania Hoteliera

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Hoteliera InterContinental are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Uzinexport and Compania Hoteliera

The main advantage of trading using opposite Uzinexport and Compania Hoteliera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uzinexport 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 Uzinexport SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.