Correlation Between Summit Hotel and Hyrican Informationssyst

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

By analyzing existing cross correlation between Summit Hotel Properties and Hyrican Informationssysteme Aktiengesellschaft, you can compare the effects of market volatilities on Summit Hotel and Hyrican Informationssyst 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 Summit Hotel with a short position of Hyrican Informationssyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and Hyrican Informationssyst.

Diversification Opportunities for Summit Hotel and Hyrican Informationssyst

-0.06

Correlation Coefficient

Summit Hotel  Hyrican Informationssyst

Good diversification

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

Pair Corralation between Summit Hotel and Hyrican Informationssyst

Assuming the 90 days horizon Summit Hotel is expected to generate 4.12 times less return on investment than Hyrican Informationssyst. In addition to that, Summit Hotel is 1.02 times more volatile than Hyrican Informationssysteme Aktiengesellschaft. It trades about 0.04 of its total potential returns per unit of risk. Hyrican Informationssysteme Aktiengesellschaft is currently generating about 0.18 per unit of volatility. If you would invest  420.00  in Hyrican Informationssysteme Aktiengesellschaft on September 21, 2024 and sell it today you would earn a total of  110.00  from holding Hyrican Informationssysteme Aktiengesellschaft or generate 26.19% return on investment over 90 days.

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

Summit Hotel Properties  vs.  Hyrican Informationssysteme Ak

Summit Hotel Properties

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Summit Hotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hyrican Informationssyst

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hyrican Informationssysteme Aktiengesellschaft are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hyrican Informationssyst reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Hotel and Hyrican Informationssyst

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

The idea behind Summit Hotel Properties and Hyrican Informationssysteme Aktiengesellschaft 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.