Correlation Between Chateau International and Lion Travel

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

By analyzing existing cross correlation between Chateau International Development and Lion Travel Service, you can compare the effects of market volatilities on Chateau International and Lion Travel 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 Chateau International with a short position of Lion Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chateau International and Lion Travel.

Diversification Opportunities for Chateau International and Lion Travel

0.55

Correlation Coefficient

Chateau International  Lion Travel

Very weak diversification

The 3 months correlation between Chateau and Lion is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chateau International Developm and Lion Travel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Travel Service and Chateau International 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 Chateau International Development are associated (or correlated) with Lion Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Travel Service has no effect on the direction of Chateau International i.e., Chateau International and Lion Travel go up and down completely randomly.

Pair Corralation between Chateau International and Lion Travel

Assuming the 90 days trading horizon Chateau International Development is expected to under-perform the Lion Travel. In addition to that, Chateau International is 1.18 times more volatile than Lion Travel Service. It trades about -0.18 of its total potential returns per unit of risk. Lion Travel Service is currently generating about -0.1 per unit of volatility. If you would invest  13,750  in Lion Travel Service on September 2, 2024 and sell it today you would lose (1,600) from holding Lion Travel Service or give up 11.64% of portfolio value over 90 days.

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

Chateau International Developm  vs.  Lion Travel Service

Chateau International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chateau International Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lion Travel Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Travel Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chateau International and Lion Travel

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

The idea behind Chateau International Development and Lion Travel Service 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.