Correlation Between Accor S and Hotelim Socit

Can any of the company-specific risk be diversified away by investing in both Accor S and Hotelim Socit 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 Accor S and Hotelim Socit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Accor S A and Hotelim Socit Anonyme, you can compare the effects of market volatilities on Accor S and Hotelim Socit 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 Accor S with a short position of Hotelim Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accor S and Hotelim Socit.

Diversification Opportunities for Accor S and Hotelim Socit

0.48

Correlation Coefficient

Accor S  Hotelim Socit

Very weak diversification

The 3 months correlation between Accor and Hotelim is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Accor S A and Hotelim Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotelim Socit Anonyme and Accor S 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 Accor S A are associated (or correlated) with Hotelim Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotelim Socit Anonyme has no effect on the direction of Accor S i.e., Accor S and Hotelim Socit go up and down completely randomly.

Pair Corralation between Accor S and Hotelim Socit

Assuming the 90 days horizon Accor S is expected to generate 334.25 times less return on investment than Hotelim Socit. But when comparing it to its historical volatility, Accor S A is 7.57 times less risky than Hotelim Socit. It trades about 0.0 of its potential returns per unit of risk. Hotelim Socit Anonyme is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,500  in Hotelim Socit Anonyme on February 23, 2024 and sell it today you would earn a total of  800.00  from holding Hotelim Socit Anonyme or generate 32.0% return on investment over 90 days.

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

Accor S A  vs.  Hotelim Socit Anonyme

Accor S A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accor S A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Accor S is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hotelim Socit Anonyme

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hotelim Socit Anonyme are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Hotelim Socit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Accor S and Hotelim Socit

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

The idea behind Accor S A and Hotelim Socit Anonyme 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.