Correlation Between GreenTree Hospitality and Hyatt Hotels

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Can any of the company-specific risk be diversified away by investing in both GreenTree Hospitality and Hyatt 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 GreenTree Hospitality and Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenTree Hospitality Group and Hyatt Hotels, you can compare the effects of market volatilities on GreenTree Hospitality and Hyatt 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 GreenTree Hospitality with a short position of Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenTree Hospitality and Hyatt Hotels.

Diversification Opportunities for GreenTree Hospitality and Hyatt Hotels

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between GreenTree and Hyatt is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding GreenTree Hospitality Group and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels and GreenTree Hospitality 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 GreenTree Hospitality Group are associated (or correlated) with Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of GreenTree Hospitality i.e., GreenTree Hospitality and Hyatt Hotels go up and down completely randomly.

Pair Corralation between GreenTree Hospitality and Hyatt Hotels

Considering the 90-day investment horizon GreenTree Hospitality Group is expected to under-perform the Hyatt Hotels. In addition to that, GreenTree Hospitality is 1.61 times more volatile than Hyatt Hotels. It trades about 0.0 of its total potential returns per unit of risk. Hyatt Hotels is currently generating about 0.07 per unit of volatility. If you would invest  9,363  in Hyatt Hotels on December 29, 2023 and sell it today you would earn a total of  6,721  from holding Hyatt Hotels or generate 71.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

GreenTree Hospitality Group  vs.  Hyatt Hotels

 Performance 
       Timeline  
GreenTree Hospitality 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days GreenTree Hospitality Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Hyatt Hotels 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Hyatt Hotels demonstrated solid returns over the last few months and may actually be approaching a breakup point.

GreenTree Hospitality and Hyatt Hotels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GreenTree Hospitality and Hyatt Hotels

The main advantage of trading using opposite GreenTree Hospitality and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenTree Hospitality position performs unexpectedly, Hyatt 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.
The idea behind GreenTree Hospitality Group and Hyatt 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.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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