Correlation Between Honda and Hotis Othon

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

By analyzing existing cross correlation between Honda Motor Co and Hotis Othon SA, you can compare the effects of market volatilities on Honda and Hotis Othon 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 Honda with a short position of Hotis Othon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honda and Hotis Othon.

Diversification Opportunities for Honda and Hotis Othon

-0.38

Correlation Coefficient

Honda  Hotis Othon

Very good diversification

The 3 months correlation between Honda and Hotis is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Honda Motor Co and Hotis Othon SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotis Othon SA and Honda 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 Honda Motor Co are associated (or correlated) with Hotis Othon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotis Othon SA has no effect on the direction of Honda i.e., Honda and Hotis Othon go up and down completely randomly.

Pair Corralation between Honda and Hotis Othon

Assuming the 90 days trading horizon Honda is expected to generate 3.36 times less return on investment than Hotis Othon. But when comparing it to its historical volatility, Honda Motor Co is 1.92 times less risky than Hotis Othon. It trades about 0.09 of its potential returns per unit of risk. Hotis Othon SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  273.00  in Hotis Othon SA on April 25, 2025 and sell it today you would earn a total of  117.00  from holding Hotis Othon SA or generate 42.86% return on investment over 90 days.

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

Honda Motor Co  vs.  Hotis Othon SA

Honda Motor

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Honda Motor Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Honda may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Hotis Othon SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hotis Othon SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hotis Othon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Honda and Hotis Othon

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

The idea behind Honda Motor Co and Hotis Othon SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.