Correlation Between Information Services and American Hotel

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

By analyzing existing cross correlation between Information Services and American Hotel Income, you can compare the effects of market volatilities on Information Services and American Hotel 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 Information Services with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and American Hotel.

Diversification Opportunities for Information Services and American Hotel

-0.83

Correlation Coefficient

Information Services  American Hotel

Pay attention - limited upside

The 3 months correlation between Information and American is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Information Services and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and Information Services 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 Information Services are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Information Services i.e., Information Services and American Hotel go up and down completely randomly.

Pair Corralation between Information Services and American Hotel

Assuming the 90 days trading horizon Information Services is expected to generate 0.37 times more return on investment than American Hotel. However, Information Services is 2.69 times less risky than American Hotel. It trades about 0.27 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.07 per unit of risk. If you would invest  2,594  in Information Services on April 22, 2025 and sell it today you would earn a total of  656.00  from holding Information Services or generate 25.29% return on investment over 90 days.

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

Information Services  vs.  American Hotel Income

Information Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Information Services displayed solid returns over the last few months and may actually be approaching a breakup point.

American Hotel Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Hotel Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Information Services and American Hotel

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

The idea behind Information Services and American Hotel Income 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..