Correlation Between Pierre Et and Hotel Majestic

Can any of the company-specific risk be diversified away by investing in both Pierre Et and Hotel Majestic 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 Hotel Majestic 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 Hotel Majestic Cannes, you can compare the effects of market volatilities on Pierre Et and Hotel Majestic 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 Hotel Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pierre Et and Hotel Majestic.

Diversification Opportunities for Pierre Et and Hotel Majestic

0.04

Correlation Coefficient

Pierre Et  Hotel Majestic

Significant diversification

The 3 months correlation between Pierre and Hotel is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pierre et Vacances and Hotel Majestic Cannes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Majestic Cannes 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 Hotel Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Majestic Cannes has no effect on the direction of Pierre Et i.e., Pierre Et and Hotel Majestic go up and down completely randomly.

Pair Corralation between Pierre Et and Hotel Majestic

Assuming the 90 days trading horizon Pierre et Vacances is expected to generate 0.99 times more return on investment than Hotel Majestic. However, Pierre et Vacances is 1.01 times less risky than Hotel Majestic. It trades about 0.08 of its potential returns per unit of risk. Hotel Majestic Cannes is currently generating about 0.01 per unit of risk. If you would invest  144.00  in Pierre et Vacances on October 24, 2024 and sell it today you would earn a total of  15.00  from holding Pierre et Vacances or generate 10.42% return on investment over 90 days.

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

Pierre et Vacances  vs.  Hotel Majestic Cannes

Pierre et Vacances

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pierre et Vacances are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Pierre Et sustained solid returns over the last few months and may actually be approaching a breakup point.

Hotel Majestic Cannes

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Majestic Cannes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hotel Majestic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pierre Et and Hotel Majestic

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

The idea behind Pierre et Vacances and Hotel Majestic Cannes 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.