Correlation Between CHINA EDUCATION and Pebblebrook Hotel

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Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and Pebblebrook Hotel 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 CHINA EDUCATION and Pebblebrook Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and Pebblebrook Hotel Trust, you can compare the effects of market volatilities on CHINA EDUCATION and Pebblebrook Hotel 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 CHINA EDUCATION with a short position of Pebblebrook Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Pebblebrook Hotel.

Diversification Opportunities for CHINA EDUCATION and Pebblebrook Hotel

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CHINA and Pebblebrook is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and Pebblebrook Hotel Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pebblebrook Hotel Trust and CHINA EDUCATION 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 CHINA EDUCATION GROUP are associated (or correlated) with Pebblebrook Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pebblebrook Hotel Trust has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and Pebblebrook Hotel go up and down completely randomly.

Pair Corralation between CHINA EDUCATION and Pebblebrook Hotel

Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to under-perform the Pebblebrook Hotel. In addition to that, CHINA EDUCATION is 1.25 times more volatile than Pebblebrook Hotel Trust. It trades about -0.15 of its total potential returns per unit of risk. Pebblebrook Hotel Trust is currently generating about 0.06 per unit of volatility. If you would invest  1,260  in Pebblebrook Hotel Trust on September 23, 2024 and sell it today you would earn a total of  30.00  from holding Pebblebrook Hotel Trust or generate 2.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

CHINA EDUCATION GROUP  vs.  Pebblebrook Hotel Trust

 Performance 
       Timeline  
CHINA EDUCATION GROUP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CHINA EDUCATION GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.
Pebblebrook Hotel Trust 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Pebblebrook Hotel Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pebblebrook Hotel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CHINA EDUCATION and Pebblebrook Hotel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CHINA EDUCATION and Pebblebrook Hotel

The main advantage of trading using opposite CHINA EDUCATION and Pebblebrook Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, Pebblebrook Hotel 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 Pebblebrook Hotel will offset losses from the drop in Pebblebrook Hotel's long position.
The idea behind CHINA EDUCATION GROUP and Pebblebrook Hotel Trust 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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