Correlation Between Hotis Othon and Inepar SA

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

By analyzing existing cross correlation between Hotis Othon SA and Inepar SA Indstria, you can compare the effects of market volatilities on Hotis Othon and Inepar SA 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 Hotis Othon with a short position of Inepar SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotis Othon and Inepar SA.

Diversification Opportunities for Hotis Othon and Inepar SA

-0.78

Correlation Coefficient

Hotis Othon  Inepar SA

Pay attention - limited upside

The 3 months correlation between Hotis and Inepar is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hotis Othon SA and Inepar SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inepar SA Indstria and Hotis Othon 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 Hotis Othon SA are associated (or correlated) with Inepar SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inepar SA Indstria has no effect on the direction of Hotis Othon i.e., Hotis Othon and Inepar SA go up and down completely randomly.

Pair Corralation between Hotis Othon and Inepar SA

Assuming the 90 days trading horizon Hotis Othon is expected to generate 2.47 times less return on investment than Inepar SA. But when comparing it to its historical volatility, Hotis Othon SA is 1.02 times less risky than Inepar SA. It trades about 0.1 of its potential returns per unit of risk. Inepar SA Indstria is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Inepar SA Indstria on September 13, 2024 and sell it today you would earn a total of  24.00  from holding Inepar SA Indstria or generate 17.78% return on investment over 90 days.

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

Hotis Othon SA  vs.  Inepar SA Indstria

Hotis Othon SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hotis Othon SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hotis Othon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hotis Othon and Inepar SA

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

The idea behind Hotis Othon SA and Inepar SA Indstria 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.

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 Stocks Directory module to find actively traded stocks across global markets.