Correlation Between MINCO SILVER and Choice Hotels

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

By analyzing existing cross correlation between MINCO SILVER and Choice Hotels International, you can compare the effects of market volatilities on MINCO SILVER and Choice 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 MINCO SILVER with a short position of Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MINCO SILVER and Choice Hotels.

Diversification Opportunities for MINCO SILVER and Choice Hotels

-0.27

Correlation Coefficient

MINCO SILVER  Choice Hotels

Very good diversification

The 3 months correlation between MINCO and Choice is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding MINCO SILVER and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and MINCO SILVER 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 MINCO SILVER are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of MINCO SILVER i.e., MINCO SILVER and Choice Hotels go up and down completely randomly.

Pair Corralation between MINCO SILVER and Choice Hotels

Assuming the 90 days trading horizon MINCO SILVER is expected to generate 2.45 times more return on investment than Choice Hotels. However, MINCO SILVER is 2.45 times more volatile than Choice Hotels International. It trades about 0.08 of its potential returns per unit of risk. Choice Hotels International is currently generating about -0.06 per unit of risk. If you would invest  12.00  in MINCO SILVER on December 29, 2024 and sell it today you would earn a total of  2.00  from holding MINCO SILVER or generate 16.67% return on investment over 90 days.

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

MINCO SILVER  vs.  Choice Hotels International

MINCO SILVER

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MINCO SILVER are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, MINCO SILVER unveiled solid returns over the last few months and may actually be approaching a breakup point.

Choice Hotels Intern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Choice Hotels International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MINCO SILVER and Choice Hotels

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

The idea behind MINCO SILVER and Choice Hotels International 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.