Correlation Between HYATT HOTELS and CeoTronics

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

By analyzing existing cross correlation between HYATT HOTELS A and CeoTronics AG, you can compare the effects of market volatilities on HYATT HOTELS and CeoTronics 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 HYATT HOTELS with a short position of CeoTronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and CeoTronics.

Diversification Opportunities for HYATT HOTELS and CeoTronics

0.64

Correlation Coefficient

HYATT HOTELS  CeoTronics

Poor diversification

The 3 months correlation between HYATT and CeoTronics is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG and HYATT HOTELS 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 HYATT HOTELS A are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and CeoTronics go up and down completely randomly.

Pair Corralation between HYATT HOTELS and CeoTronics

Assuming the 90 days trading horizon HYATT HOTELS is expected to generate 2.11 times less return on investment than CeoTronics. But when comparing it to its historical volatility, HYATT HOTELS A is 1.48 times less risky than CeoTronics. It trades about 0.12 of its potential returns per unit of risk. CeoTronics AG is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  496.00  in CeoTronics AG on September 12, 2024 and sell it today you would earn a total of  169.00  from holding CeoTronics AG or generate 34.07% return on investment over 90 days.

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

HYATT HOTELS A  vs.  CeoTronics AG

HYATT HOTELS A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HYATT HOTELS unveiled solid returns over the last few months and may actually be approaching a breakup point.

CeoTronics AG

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HYATT HOTELS and CeoTronics

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

The idea behind HYATT HOTELS A and CeoTronics AG 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.