Correlation Between GreenTree Hospitality and Choice Hotels

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

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

Diversification Opportunities for GreenTree Hospitality and Choice Hotels

0.61

Correlation Coefficient

GreenTree Hospitality  Choice Hotels

Poor diversification

The 3 months correlation between GreenTree and Choice is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GreenTree Hospitality Group 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 GreenTree Hospitality 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 GreenTree Hospitality Group 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 GreenTree Hospitality i.e., GreenTree Hospitality and Choice Hotels go up and down completely randomly.

Pair Corralation between GreenTree Hospitality and Choice Hotels

Considering the 90-day investment horizon GreenTree Hospitality Group is expected to generate 2.39 times more return on investment than Choice Hotels. However, GreenTree Hospitality is 2.39 times more volatile than Choice Hotels International. It trades about 0.11 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.06 per unit of risk. If you would invest  211.00  in GreenTree Hospitality Group on April 24, 2025 and sell it today you would earn a total of  48.00  from holding GreenTree Hospitality Group or generate 22.75% return on investment over 90 days.

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

GreenTree Hospitality Group  vs.  Choice Hotels International

GreenTree Hospitality

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTree Hospitality Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, GreenTree Hospitality reported solid returns over the last few months and may actually be approaching a breakup point.

Choice Hotels Intern

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Choice Hotels International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Choice Hotels is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GreenTree Hospitality and Choice Hotels

The main advantage of trading using opposite GreenTree Hospitality and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenTree Hospitality 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 GreenTree Hospitality Group 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 CEOs Directory module to screen CEOs from public companies around the world.