Correlation Between CONSTANCE HOTELS and LUX ISLAND

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

By analyzing existing cross correlation between CONSTANCE HOTELS SERVICES and LUX ISLAND RESORTS, you can compare the effects of market volatilities on CONSTANCE HOTELS and LUX ISLAND 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 CONSTANCE HOTELS with a short position of LUX ISLAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONSTANCE HOTELS and LUX ISLAND.

Diversification Opportunities for CONSTANCE HOTELS and LUX ISLAND

-0.16

Correlation Coefficient

CONSTANCE HOTELS  LUX ISLAND

Good diversification

The 3 months correlation between CONSTANCE and LUX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CONSTANCE HOTELS SERVICES and LUX ISLAND RESORTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUX ISLAND RESORTS and CONSTANCE 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 CONSTANCE HOTELS SERVICES are associated (or correlated) with LUX ISLAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUX ISLAND RESORTS has no effect on the direction of CONSTANCE HOTELS i.e., CONSTANCE HOTELS and LUX ISLAND go up and down completely randomly.

Pair Corralation between CONSTANCE HOTELS and LUX ISLAND

Assuming the 90 days trading horizon CONSTANCE HOTELS SERVICES is expected to generate 0.11 times more return on investment than LUX ISLAND. However, CONSTANCE HOTELS SERVICES is 9.2 times less risky than LUX ISLAND. It trades about 0.0 of its potential returns per unit of risk. LUX ISLAND RESORTS is currently generating about -0.1 per unit of risk. If you would invest  1,950  in CONSTANCE HOTELS SERVICES on September 15, 2024 and sell it today you would earn a total of  0.00  from holding CONSTANCE HOTELS SERVICES or generate 0.0% return on investment over 90 days.

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

CONSTANCE HOTELS SERVICES  vs.  LUX ISLAND RESORTS

CONSTANCE HOTELS SERVICES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTANCE HOTELS SERVICES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CONSTANCE HOTELS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

LUX ISLAND RESORTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LUX ISLAND RESORTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CONSTANCE HOTELS and LUX ISLAND

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

The idea behind CONSTANCE HOTELS SERVICES and LUX ISLAND RESORTS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.