Correlation Between Autocorp Holding and Grande Hospitality

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

By analyzing existing cross correlation between Autocorp Holding Public and Grande Hospitality Real, you can compare the effects of market volatilities on Autocorp Holding and Grande Hospitality 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 Autocorp Holding with a short position of Grande Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autocorp Holding and Grande Hospitality.

Diversification Opportunities for Autocorp Holding and Grande Hospitality

0.37

Correlation Coefficient

Autocorp Holding  Grande Hospitality

Weak diversification

The 3 months correlation between Autocorp and Grande is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Autocorp Holding Public and Grande Hospitality Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Hospitality Real and Autocorp Holding 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 Autocorp Holding Public are associated (or correlated) with Grande Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Hospitality Real has no effect on the direction of Autocorp Holding i.e., Autocorp Holding and Grande Hospitality go up and down completely randomly.

Pair Corralation between Autocorp Holding and Grande Hospitality

Assuming the 90 days trading horizon Autocorp Holding Public is expected to under-perform the Grande Hospitality. In addition to that, Autocorp Holding is 1.88 times more volatile than Grande Hospitality Real. It trades about -0.17 of its total potential returns per unit of risk. Grande Hospitality Real is currently generating about -0.03 per unit of volatility. If you would invest  695.00  in Grande Hospitality Real on October 1, 2024 and sell it today you would lose (15.00) from holding Grande Hospitality Real or give up 2.16% of portfolio value over 90 days.

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

Autocorp Holding Public  vs.  Grande Hospitality Real

Autocorp Holding Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autocorp Holding Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Grande Hospitality Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Autocorp Holding and Grande Hospitality

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

The idea behind Autocorp Holding Public and Grande Hospitality Real 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.