Correlation Between INTERCONT HOTELS and COVIVIO HOTELS

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Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and COVIVIO HOTELS 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 INTERCONT HOTELS and COVIVIO HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and COVIVIO HOTELS INH, you can compare the effects of market volatilities on INTERCONT HOTELS and COVIVIO HOTELS 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 INTERCONT HOTELS with a short position of COVIVIO HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and COVIVIO HOTELS.

Diversification Opportunities for INTERCONT HOTELS and COVIVIO HOTELS

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between INTERCONT and COVIVIO is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and COVIVIO HOTELS INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVIVIO HOTELS INH and INTERCONT 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 INTERCONT HOTELS are associated (or correlated) with COVIVIO HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVIVIO HOTELS INH has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and COVIVIO HOTELS go up and down completely randomly.

Pair Corralation between INTERCONT HOTELS and COVIVIO HOTELS

Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 1.34 times more return on investment than COVIVIO HOTELS. However, INTERCONT HOTELS is 1.34 times more volatile than COVIVIO HOTELS INH. It trades about 0.27 of its potential returns per unit of risk. COVIVIO HOTELS INH is currently generating about -0.03 per unit of risk. If you would invest  9,050  in INTERCONT HOTELS on September 12, 2024 and sell it today you would earn a total of  3,350  from holding INTERCONT HOTELS or generate 37.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

INTERCONT HOTELS  vs.  COVIVIO HOTELS INH

 Performance 
       Timeline  
INTERCONT HOTELS 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.
COVIVIO HOTELS INH 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days COVIVIO HOTELS INH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COVIVIO HOTELS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INTERCONT HOTELS and COVIVIO HOTELS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with INTERCONT HOTELS and COVIVIO HOTELS

The main advantage of trading using opposite INTERCONT HOTELS and COVIVIO HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, COVIVIO HOTELS 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 COVIVIO HOTELS will offset losses from the drop in COVIVIO HOTELS's long position.
The idea behind INTERCONT HOTELS and COVIVIO HOTELS INH 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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