Correlation Between ÜSTRA Hannoversche and Xenia Hotels

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

By analyzing existing cross correlation between STRA Hannoversche Verkehrsbetriebe and Xenia Hotels Resorts, you can compare the effects of market volatilities on ÜSTRA Hannoversche and Xenia 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 ÜSTRA Hannoversche with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ÜSTRA Hannoversche and Xenia Hotels.

Diversification Opportunities for ÜSTRA Hannoversche and Xenia Hotels

-0.36

Correlation Coefficient

ÜSTRA Hannoversche  Xenia Hotels

Very good diversification

The 3 months correlation between ÜSTRA and Xenia is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding STRA Hannoversche Verkehrsbetr and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts and ÜSTRA Hannoversche 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 STRA Hannoversche Verkehrsbetriebe are associated (or correlated) with Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of ÜSTRA Hannoversche i.e., ÜSTRA Hannoversche and Xenia Hotels go up and down completely randomly.

Pair Corralation between ÜSTRA Hannoversche and Xenia Hotels

Assuming the 90 days horizon ÜSTRA Hannoversche is expected to generate 6.08 times less return on investment than Xenia Hotels. In addition to that, ÜSTRA Hannoversche is 1.11 times more volatile than Xenia Hotels Resorts. It trades about 0.0 of its total potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.01 per unit of volatility. If you would invest  1,085  in Xenia Hotels Resorts on April 20, 2025 and sell it today you would earn a total of  15.00  from holding Xenia Hotels Resorts or generate 1.38% return on investment over 90 days.

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

STRA Hannoversche Verkehrsbetr  vs.  Xenia Hotels Resorts

ÜSTRA Hannoversche

Risk-Adjusted Performance

Very Weak

Over the last 90 days STRA Hannoversche Verkehrsbetriebe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ÜSTRA Hannoversche is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Xenia Hotels Resorts

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Xenia Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ÜSTRA Hannoversche and Xenia Hotels

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

The idea behind STRA Hannoversche Verkehrsbetriebe and Xenia Hotels Resorts 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.