Correlation Between Regional Health and InnSuites Hospitality

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

By analyzing existing cross correlation between Regional Health Properties and InnSuites Hospitality Trust, you can compare the effects of market volatilities on Regional Health and InnSuites Hospitality 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 Regional Health with a short position of InnSuites Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Health and InnSuites Hospitality.

Diversification Opportunities for Regional Health and InnSuites Hospitality

-0.19

Correlation Coefficient

Regional Health  InnSuites Hospitality

Good diversification

The 3 months correlation between Regional and InnSuites is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Regional Health Properties and InnSuites Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnSuites Hospitality and Regional Health 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 Regional Health Properties are associated (or correlated) with InnSuites Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnSuites Hospitality has no effect on the direction of Regional Health i.e., Regional Health and InnSuites Hospitality go up and down completely randomly.

Pair Corralation between Regional Health and InnSuites Hospitality

Considering the 90-day investment horizon Regional Health is expected to generate 1.81 times less return on investment than InnSuites Hospitality. In addition to that, Regional Health is 2.31 times more volatile than InnSuites Hospitality Trust. It trades about 0.01 of its total potential returns per unit of risk. InnSuites Hospitality Trust is currently generating about 0.05 per unit of volatility. If you would invest  200.00  in InnSuites Hospitality Trust on August 31, 2024 and sell it today you would earn a total of  15.00  from holding InnSuites Hospitality Trust or generate 7.5% return on investment over 90 days.

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

Regional Health Properties  vs.  InnSuites Hospitality Trust

Regional Health Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Regional Health is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

InnSuites Hospitality

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InnSuites Hospitality Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, InnSuites Hospitality may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Regional Health and InnSuites Hospitality

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

The idea behind Regional Health Properties and InnSuites Hospitality Trust 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.