Correlation Between Metalliance and Covivio Hotels

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

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

Diversification Opportunities for Metalliance and Covivio Hotels

0.0

Correlation Coefficient

Metalliance  Covivio Hotels

Pay attention - limited upside

The 3 months correlation between Metalliance and Covivio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metalliance SA and Covivio Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covivio Hotels and Metalliance 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 Metalliance SA 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 has no effect on the direction of Metalliance i.e., Metalliance and Covivio Hotels go up and down completely randomly.

Pair Corralation between Metalliance and Covivio Hotels

If you would invest  1,840  in Covivio Hotels on September 4, 2024 and sell it today you would earn a total of  60.00  from holding Covivio Hotels or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Metalliance SA  vs.  Covivio Hotels

Metalliance SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalliance SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Metalliance is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Covivio Hotels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Covivio Hotels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Covivio Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Metalliance and Covivio Hotels

The main advantage of trading using opposite Metalliance and Covivio Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalliance 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' long position.

The idea behind Metalliance SA and Covivio Hotels 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.