Correlation Between Various Eateries and PPHE Hotel

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

By analyzing existing cross correlation between Various Eateries PLC and PPHE Hotel Group, you can compare the effects of market volatilities on Various Eateries and PPHE Hotel 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 Various Eateries with a short position of PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Various Eateries and PPHE Hotel.

Diversification Opportunities for Various Eateries and PPHE Hotel

-0.82

Correlation Coefficient

Various Eateries  PPHE Hotel

Pay attention - limited upside

The 3 months correlation between Various and PPHE is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Various Eateries PLC and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group and Various Eateries 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 Various Eateries PLC are associated (or correlated) with PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of Various Eateries i.e., Various Eateries and PPHE Hotel go up and down completely randomly.

Pair Corralation between Various Eateries and PPHE Hotel

Assuming the 90 days trading horizon Various Eateries PLC is expected to under-perform the PPHE Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Various Eateries PLC is 2.79 times less risky than PPHE Hotel. The stock trades about -0.35 of its potential returns per unit of risk. The PPHE Hotel Group is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  118,000  in PPHE Hotel Group on September 22, 2024 and sell it today you would earn a total of  18,500  from holding PPHE Hotel Group or generate 15.68% return on investment over 90 days.

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

Various Eateries PLC  vs.  PPHE Hotel Group

Various Eateries PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Various Eateries PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Various Eateries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

PPHE Hotel Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, PPHE Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Various Eateries and PPHE Hotel

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

The idea behind Various Eateries PLC and PPHE Hotel Group 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.