Correlation Between Eco Atlantic and American Hotel

Can any of the company-specific risk be diversified away by investing in both Eco Atlantic and American 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 Eco Atlantic and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eco Atlantic Oil and American Hotel Income, you can compare the effects of market volatilities on Eco Atlantic and American 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 Eco Atlantic with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Atlantic and American Hotel.

Diversification Opportunities for Eco Atlantic and American Hotel

-0.36

Correlation Coefficient

Eco Atlantic  American Hotel

Very good diversification

The 3 months correlation between Eco and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eco Atlantic Oil and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and Eco Atlantic 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 Eco Atlantic Oil are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Eco Atlantic i.e., Eco Atlantic and American Hotel go up and down completely randomly.

Pair Corralation between Eco Atlantic and American Hotel

Assuming the 90 days horizon Eco Atlantic Oil is expected to generate 1.36 times more return on investment than American Hotel. However, Eco Atlantic is 1.36 times more volatile than American Hotel Income. It trades about -0.05 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.28 per unit of risk. If you would invest  21.00  in Eco Atlantic Oil on August 31, 2024 and sell it today you would lose (2.00) from holding Eco Atlantic Oil or give up 9.52% of portfolio value over 90 days.

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

Eco Atlantic Oil  vs.  American Hotel Income

Eco Atlantic Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Atlantic Oil 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.

American Hotel Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Hotel Income are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, American Hotel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eco Atlantic and American Hotel

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

The idea behind Eco Atlantic Oil and American Hotel Income 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.