Correlation Between Hyatt Hotels and GreenTree Hospitality

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

By analyzing existing cross correlation between Hyatt Hotels and GreenTree Hospitality Group, you can compare the effects of market volatilities on Hyatt Hotels and GreenTree Hospitality 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 Hyatt Hotels with a short position of GreenTree Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyatt Hotels and GreenTree Hospitality.

Diversification Opportunities for Hyatt Hotels and GreenTree Hospitality

0.12

Correlation Coefficient

Hyatt Hotels  GreenTree Hospitality

Average diversification

The 3 months correlation between Hyatt and GreenTree is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hyatt Hotels and GreenTree Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenTree Hospitality and Hyatt Hotels 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 Hyatt Hotels are associated (or correlated) with GreenTree Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenTree Hospitality has no effect on the direction of Hyatt Hotels i.e., Hyatt Hotels and GreenTree Hospitality go up and down completely randomly.

Pair Corralation between Hyatt Hotels and GreenTree Hospitality

Taking into account the 90-day investment horizon Hyatt Hotels is expected to generate 0.75 times more return on investment than GreenTree Hospitality. However, Hyatt Hotels is 1.33 times less risky than GreenTree Hospitality. It trades about 0.12 of its potential returns per unit of risk. GreenTree Hospitality Group is currently generating about -0.05 per unit of risk. If you would invest  13,063  in Hyatt Hotels on January 24, 2024 and sell it today you would earn a total of  1,918  from holding Hyatt Hotels or generate 14.68% return on investment over 90 days.

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

Hyatt Hotels  vs.  GreenTree Hospitality Group

Hyatt Hotels

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyatt Hotels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Hyatt Hotels demonstrated solid returns over the last few months and may actually be approaching a breakup point.

GreenTree Hospitality

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Hyatt Hotels and GreenTree Hospitality

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

The idea behind Hyatt Hotels and GreenTree Hospitality Group 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.