Correlation Between Huazhu and Soho House
Can any of the company-specific risk be diversified away by investing in both Huazhu and Soho House 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 Huazhu and Soho House into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huazhu Group and Soho House Co, you can compare the effects of market volatilities on Huazhu and Soho House 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 Huazhu with a short position of Soho House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huazhu and Soho House.
Diversification Opportunities for Huazhu and Soho House
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Huazhu and Soho is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Huazhu Group and Soho House Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soho House and Huazhu 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 Huazhu Group are associated (or correlated) with Soho House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soho House has no effect on the direction of Huazhu i.e., Huazhu and Soho House go up and down completely randomly.
Pair Corralation between Huazhu and Soho House
Given the investment horizon of 90 days Huazhu Group is expected to generate 1.01 times more return on investment than Soho House. However, Huazhu is 1.01 times more volatile than Soho House Co. It trades about 0.04 of its potential returns per unit of risk. Soho House Co is currently generating about -0.09 per unit of risk. If you would invest 4,026 in Huazhu Group on February 4, 2024 and sell it today you would earn a total of 72.00 from holding Huazhu Group or generate 1.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
Huazhu Group vs. Soho House Co
Performance |
Timeline |
Huazhu Group |
Soho House |
Huazhu and Soho House Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Huazhu and Soho House
The main advantage of trading using opposite Huazhu and Soho House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huazhu position performs unexpectedly, Soho House 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 Soho House will offset losses from the drop in Soho House's long position.Huazhu vs. Yatra Online | Huazhu vs. Despegar Corp | Huazhu vs. Mondee Holdings | Huazhu vs. MakeMyTrip Limited |
Soho House vs. Ecolab Inc | Soho House vs. Valhi Inc | Soho House vs. LianDi Clean Technology | Soho House vs. Purecycle Technologies Holdings |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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