Correlation Between Mondee Holdings and Choice Hotels

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

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

Diversification Opportunities for Mondee Holdings and Choice Hotels

0.24

Correlation Coefficient

Mondee Holdings  Choice Hotels

Modest diversification

The 3 months correlation between Mondee and Choice is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mondee Holdings and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern and Mondee Holdings 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 Mondee Holdings are associated (or correlated) with Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Mondee Holdings i.e., Mondee Holdings and Choice Hotels go up and down completely randomly.

Pair Corralation between Mondee Holdings and Choice Hotels

Given the investment horizon of 90 days Mondee Holdings is expected to under-perform the Choice Hotels. In addition to that, Mondee Holdings is 3.55 times more volatile than Choice Hotels International. It trades about -0.02 of its total potential returns per unit of risk. Choice Hotels International is currently generating about 0.01 per unit of volatility. If you would invest  11,500  in Choice Hotels International on February 3, 2024 and sell it today you would earn a total of  501.00  from holding Choice Hotels International or generate 4.36% return on investment over 90 days.

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

Mondee Holdings  vs.  Choice Hotels International

Mondee Holdings

Risk-Adjusted Performance

7 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mondee Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Mondee Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Choice Hotels Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choice Hotels International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Choice Hotels is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Mondee Holdings and Choice Hotels

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

The idea behind Mondee Holdings and Choice Hotels International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..