Correlation Between Hoteles Bestprice and Accor S

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

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

Diversification Opportunities for Hoteles Bestprice and Accor S

-0.57

Correlation Coefficient

Hoteles Bestprice  Accor S

Excellent diversification

The 3 months correlation between Hoteles and Accor is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles Bestprice SA and Accor S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accor S A and Hoteles Bestprice 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 Hoteles Bestprice SA are associated (or correlated) with Accor S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accor S A has no effect on the direction of Hoteles Bestprice i.e., Hoteles Bestprice and Accor S go up and down completely randomly.

Pair Corralation between Hoteles Bestprice and Accor S

Assuming the 90 days trading horizon Hoteles Bestprice SA is expected to under-perform the Accor S. In addition to that, Hoteles Bestprice is 2.38 times more volatile than Accor S A. It trades about -0.24 of its total potential returns per unit of risk. Accor S A is currently generating about 0.07 per unit of volatility. If you would invest  4,179  in Accor S A on August 26, 2024 and sell it today you would earn a total of  69.00  from holding Accor S A or generate 1.65% return on investment over 90 days.

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

Hoteles Bestprice SA  vs.  Accor S A

Hoteles Bestprice

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoteles Bestprice SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Accor S A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Accor S A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Accor S sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hoteles Bestprice and Accor S

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

The idea behind Hoteles Bestprice SA and Accor S A 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.