Correlation Between DiamondRock Hospitality and CITIC Telecom
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and CITIC Telecom 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 DiamondRock Hospitality and CITIC Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and CITIC Telecom International, you can compare the effects of market volatilities on DiamondRock Hospitality and CITIC Telecom 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 DiamondRock Hospitality with a short position of CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and CITIC Telecom.
Diversification Opportunities for DiamondRock Hospitality and CITIC Telecom
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DiamondRock and CITIC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern and DiamondRock Hospitality 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 DiamondRock Hospitality are associated (or correlated) with CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and CITIC Telecom go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and CITIC Telecom
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 1.52 times more return on investment than CITIC Telecom. However, DiamondRock Hospitality is 1.52 times more volatile than CITIC Telecom International. It trades about 0.06 of its potential returns per unit of risk. CITIC Telecom International is currently generating about 0.05 per unit of risk. If you would invest 792.00 in DiamondRock Hospitality on September 26, 2024 and sell it today you would earn a total of 93.00 from holding DiamondRock Hospitality or generate 11.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
DiamondRock Hospitality vs. CITIC Telecom International
Performance |
Timeline |
DiamondRock Hospitality |
CITIC Telecom Intern |
DiamondRock Hospitality and CITIC Telecom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DiamondRock Hospitality and CITIC Telecom
The main advantage of trading using opposite DiamondRock Hospitality and CITIC Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, CITIC Telecom 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 CITIC Telecom will offset losses from the drop in CITIC Telecom's long position.DiamondRock Hospitality vs. FOUR NERS PROPERTY | DiamondRock Hospitality vs. BRAEMAR HOTELS RES | DiamondRock Hospitality vs. Sotherly Hotels |
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Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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