Correlation Between Holaluz Clidom and AmRest Holdings

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

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

Diversification Opportunities for Holaluz Clidom and AmRest Holdings

-0.36

Correlation Coefficient

Holaluz Clidom  AmRest Holdings

Very good diversification

The 3 months correlation between Holaluz and AmRest is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Holaluz Clidom SA and AmRest Holdings SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmRest Holdings SE and Holaluz Clidom 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 Holaluz Clidom SA are associated (or correlated) with AmRest Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmRest Holdings SE has no effect on the direction of Holaluz Clidom i.e., Holaluz Clidom and AmRest Holdings go up and down completely randomly.

Pair Corralation between Holaluz Clidom and AmRest Holdings

Assuming the 90 days trading horizon Holaluz Clidom SA is expected to under-perform the AmRest Holdings. In addition to that, Holaluz Clidom is 1.87 times more volatile than AmRest Holdings SE. It trades about -0.15 of its total potential returns per unit of risk. AmRest Holdings SE is currently generating about 0.2 per unit of volatility. If you would invest  550.00  in AmRest Holdings SE on February 7, 2024 and sell it today you would earn a total of  58.00  from holding AmRest Holdings SE or generate 10.55% return on investment over 90 days.

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

Holaluz Clidom SA  vs.  AmRest Holdings SE

Holaluz Clidom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holaluz Clidom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Holaluz Clidom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AmRest Holdings SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmRest Holdings SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AmRest Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Holaluz Clidom and AmRest Holdings

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

The idea behind Holaluz Clidom SA and AmRest Holdings SE 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.