Correlation Between Tycoons Worldwide and LH Hotel

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

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

Diversification Opportunities for Tycoons Worldwide and LH Hotel

-0.18

Correlation Coefficient

Tycoons Worldwide  LH Hotel

Good diversification

The 3 months correlation between Tycoons and LHHOTEL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tycoons Worldwide Group and LH Hotel Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LH Hotel Leasehold and Tycoons Worldwide 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 Tycoons Worldwide Group are associated (or correlated) with LH Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LH Hotel Leasehold has no effect on the direction of Tycoons Worldwide i.e., Tycoons Worldwide and LH Hotel go up and down completely randomly.

Pair Corralation between Tycoons Worldwide and LH Hotel

Assuming the 90 days trading horizon Tycoons Worldwide Group is expected to under-perform the LH Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Tycoons Worldwide Group is 1.22 times less risky than LH Hotel. The stock trades about -0.19 of its potential returns per unit of risk. The LH Hotel Leasehold is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,277  in LH Hotel Leasehold on September 17, 2024 and sell it today you would earn a total of  83.00  from holding LH Hotel Leasehold or generate 6.5% return on investment over 90 days.

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

Tycoons Worldwide Group  vs.  LH Hotel Leasehold

Tycoons Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tycoons Worldwide Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

LH Hotel Leasehold

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LH Hotel Leasehold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, LH Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tycoons Worldwide and LH Hotel

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

The idea behind Tycoons Worldwide Group and LH Hotel Leasehold 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.