Correlation Between Pierre Et and Hoteles Bestprice

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

By analyzing existing cross correlation between Pierre et Vacances and Hoteles Bestprice SA, you can compare the effects of market volatilities on Pierre Et and Hoteles Bestprice 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 Pierre Et with a short position of Hoteles Bestprice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pierre Et and Hoteles Bestprice.

Diversification Opportunities for Pierre Et and Hoteles Bestprice

-0.52

Correlation Coefficient

Pierre Et  Hoteles Bestprice

Excellent diversification

The 3 months correlation between Pierre and Hoteles is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pierre et Vacances and Hoteles Bestprice SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles Bestprice and Pierre Et 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 Pierre et Vacances are associated (or correlated) with Hoteles Bestprice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles Bestprice has no effect on the direction of Pierre Et i.e., Pierre Et and Hoteles Bestprice go up and down completely randomly.

Pair Corralation between Pierre Et and Hoteles Bestprice

Assuming the 90 days trading horizon Pierre Et is expected to generate 18.89 times less return on investment than Hoteles Bestprice. In addition to that, Pierre Et is 1.2 times more volatile than Hoteles Bestprice SA. It trades about 0.01 of its total potential returns per unit of risk. Hoteles Bestprice SA is currently generating about 0.21 per unit of volatility. If you would invest  300.00  in Hoteles Bestprice SA on December 30, 2024 and sell it today you would earn a total of  66.00  from holding Hoteles Bestprice SA or generate 22.0% return on investment over 90 days.

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

Pierre et Vacances  vs.  Hoteles Bestprice SA

Pierre et Vacances

Risk-Adjusted Performance

Very Weak

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

Hoteles Bestprice

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hoteles Bestprice SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hoteles Bestprice reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pierre Et and Hoteles Bestprice

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

The idea behind Pierre et Vacances and Hoteles Bestprice SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.