Correlation Between PPHE Hotel and Bloomsbury Publishing

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

By analyzing existing cross correlation between PPHE Hotel Group and Bloomsbury Publishing Plc, you can compare the effects of market volatilities on PPHE Hotel and Bloomsbury Publishing 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 PPHE Hotel with a short position of Bloomsbury Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Bloomsbury Publishing.

Diversification Opportunities for PPHE Hotel and Bloomsbury Publishing

0.06

Correlation Coefficient

PPHE Hotel  Bloomsbury Publishing

Significant diversification

The 3 months correlation between PPHE and Bloomsbury is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Bloomsbury Publishing Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomsbury Publishing Plc and PPHE Hotel 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 PPHE Hotel Group are associated (or correlated) with Bloomsbury Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomsbury Publishing Plc has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Bloomsbury Publishing go up and down completely randomly.

Pair Corralation between PPHE Hotel and Bloomsbury Publishing

Assuming the 90 days trading horizon PPHE Hotel is expected to generate 1.17 times less return on investment than Bloomsbury Publishing. But when comparing it to its historical volatility, PPHE Hotel Group is 1.36 times less risky than Bloomsbury Publishing. It trades about 0.06 of its potential returns per unit of risk. Bloomsbury Publishing Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  66,027  in Bloomsbury Publishing Plc on September 15, 2024 and sell it today you would earn a total of  3,773  from holding Bloomsbury Publishing Plc or generate 5.71% return on investment over 90 days.

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

PPHE Hotel Group  vs.  Bloomsbury Publishing Plc

PPHE Hotel Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE Hotel Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PPHE Hotel is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bloomsbury Publishing Plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomsbury Publishing Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bloomsbury Publishing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PPHE Hotel and Bloomsbury Publishing

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

The idea behind PPHE Hotel Group and Bloomsbury Publishing Plc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.