Correlation Between Holiday Island and AMREP

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

By analyzing existing cross correlation between Holiday Island Holdings and AMREP, you can compare the effects of market volatilities on Holiday Island and AMREP 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 Holiday Island with a short position of AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Island and AMREP.

Diversification Opportunities for Holiday Island and AMREP

-0.61

Correlation Coefficient

Holiday Island  AMREP

Excellent diversification

The 3 months correlation between Holiday and AMREP is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Island Holdings and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Holiday Island 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 Holiday Island Holdings are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Holiday Island i.e., Holiday Island and AMREP go up and down completely randomly.

Pair Corralation between Holiday Island and AMREP

Given the investment horizon of 90 days Holiday Island Holdings is expected to generate 4.56 times more return on investment than AMREP. However, Holiday Island is 4.56 times more volatile than AMREP. It trades about 0.05 of its potential returns per unit of risk. AMREP is currently generating about 0.19 per unit of risk. If you would invest  3.82  in Holiday Island Holdings on September 15, 2024 and sell it today you would lose (1.63) from holding Holiday Island Holdings or give up 42.67% of portfolio value over 90 days.

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

Holiday Island Holdings  vs.  AMREP

Holiday Island Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Holiday Island Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Holiday Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

AMREP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AMREP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AMREP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holiday Island and AMREP

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

The idea behind Holiday Island Holdings and AMREP 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.