Correlation Between Sotherly Hotels and NORTH MEDIA

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

By analyzing existing cross correlation between Sotherly Hotels and NORTH MEDIA AS, you can compare the effects of market volatilities on Sotherly Hotels and NORTH MEDIA 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 Sotherly Hotels with a short position of NORTH MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotherly Hotels and NORTH MEDIA.

Diversification Opportunities for Sotherly Hotels and NORTH MEDIA

0.58

Correlation Coefficient

Sotherly Hotels  NORTH MEDIA

Very weak diversification

The 3 months correlation between Sotherly and NORTH is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sotherly Hotels and NORTH MEDIA AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTH MEDIA AS and Sotherly Hotels 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 Sotherly Hotels are associated (or correlated) with NORTH MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTH MEDIA AS has no effect on the direction of Sotherly Hotels i.e., Sotherly Hotels and NORTH MEDIA go up and down completely randomly.

Pair Corralation between Sotherly Hotels and NORTH MEDIA

Assuming the 90 days horizon Sotherly Hotels is expected to generate 1.2 times less return on investment than NORTH MEDIA. In addition to that, Sotherly Hotels is 1.95 times more volatile than NORTH MEDIA AS. It trades about 0.09 of its total potential returns per unit of risk. NORTH MEDIA AS is currently generating about 0.22 per unit of volatility. If you would invest  455.00  in NORTH MEDIA AS on April 21, 2025 and sell it today you would earn a total of  135.00  from holding NORTH MEDIA AS or generate 29.67% return on investment over 90 days.

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

Sotherly Hotels  vs.  NORTH MEDIA AS

Sotherly Hotels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sotherly Hotels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sotherly Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

NORTH MEDIA AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NORTH MEDIA AS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NORTH MEDIA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sotherly Hotels and NORTH MEDIA

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

The idea behind Sotherly Hotels and NORTH MEDIA AS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.