Correlation Between First Hotel and Collins
Can any of the company-specific risk be diversified away by investing in both First Hotel and Collins 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 First Hotel and Collins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hotel Co and Collins Co, you can compare the effects of market volatilities on First Hotel and Collins 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 First Hotel with a short position of Collins. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Collins.
Diversification Opportunities for First Hotel and Collins
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Collins is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and Collins Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins and First Hotel 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 First Hotel Co are associated (or correlated) with Collins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins has no effect on the direction of First Hotel i.e., First Hotel and Collins go up and down completely randomly.
Pair Corralation between First Hotel and Collins
Assuming the 90 days trading horizon First Hotel Co is expected to generate 0.73 times more return on investment than Collins. However, First Hotel Co is 1.36 times less risky than Collins. It trades about -0.01 of its potential returns per unit of risk. Collins Co is currently generating about -0.07 per unit of risk. If you would invest 1,485 in First Hotel Co on September 6, 2024 and sell it today you would lose (5.00) from holding First Hotel Co or give up 0.34% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Hotel Co vs. Collins Co
Performance |
Timeline |
First Hotel |
Collins |
First Hotel and Collins Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Hotel and Collins
The main advantage of trading using opposite First Hotel and Collins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, Collins 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 Collins will offset losses from the drop in Collins' long position.First Hotel vs. Leofoo Development Co | First Hotel vs. Hotel Holiday Garden | First Hotel vs. Shin Shin Co | First Hotel vs. Hung Sheng Construction |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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