Correlation Between Hotis Othon and Recrusul

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

By analyzing existing cross correlation between Hotis Othon SA and Recrusul SA, you can compare the effects of market volatilities on Hotis Othon and Recrusul 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 Hotis Othon with a short position of Recrusul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotis Othon and Recrusul.

Diversification Opportunities for Hotis Othon and Recrusul

0.43

Correlation Coefficient

Hotis Othon  Recrusul

Very weak diversification

The 3 months correlation between Hotis and Recrusul is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hotis Othon SA and Recrusul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recrusul SA and Hotis Othon 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 Hotis Othon SA are associated (or correlated) with Recrusul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recrusul SA has no effect on the direction of Hotis Othon i.e., Hotis Othon and Recrusul go up and down completely randomly.

Pair Corralation between Hotis Othon and Recrusul

Assuming the 90 days trading horizon Hotis Othon SA is expected to generate 0.21 times more return on investment than Recrusul. However, Hotis Othon SA is 4.73 times less risky than Recrusul. It trades about -0.03 of its potential returns per unit of risk. Recrusul SA is currently generating about -0.17 per unit of risk. If you would invest  283.00  in Hotis Othon SA on February 20, 2024 and sell it today you would lose (7.00) from holding Hotis Othon SA or give up 2.47% of portfolio value over 90 days.

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

Hotis Othon SA  vs.  Recrusul SA

Hotis Othon SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotis Othon SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hotis Othon is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Recrusul SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Recrusul SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hotis Othon and Recrusul

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

The idea behind Hotis Othon SA and Recrusul SA 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.