Correlation Between Pyramisa Hotels and Contact Financial

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

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

Diversification Opportunities for Pyramisa Hotels and Contact Financial

-0.46

Correlation Coefficient

Pyramisa Hotels  Contact Financial

Very good diversification

The 3 months correlation between Pyramisa and Contact is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pyramisa Hotels and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding and Pyramisa 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 Pyramisa Hotels are associated (or correlated) with Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of Pyramisa Hotels i.e., Pyramisa Hotels and Contact Financial go up and down completely randomly.

Pair Corralation between Pyramisa Hotels and Contact Financial

Assuming the 90 days trading horizon Pyramisa Hotels is expected to generate 61.24 times less return on investment than Contact Financial. But when comparing it to its historical volatility, Pyramisa Hotels is 3.42 times less risky than Contact Financial. It trades about 0.01 of its potential returns per unit of risk. Contact Financial Holding is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  420.00  in Contact Financial Holding on April 22, 2025 and sell it today you would earn a total of  124.00  from holding Contact Financial Holding or generate 29.52% return on investment over 90 days.

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

Pyramisa Hotels  vs.  Contact Financial Holding

Pyramisa Hotels

Risk-Adjusted Performance

Very Weak

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

Contact Financial Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Contact Financial Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Contact Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pyramisa Hotels and Contact Financial

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

The idea behind Pyramisa Hotels and Contact Financial Holding 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..