Correlation Between Hilton Worldwide and Huazhu
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and Huazhu 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 Hilton Worldwide and Huazhu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Worldwide Holdings and Huazhu Group, you can compare the effects of market volatilities on Hilton Worldwide and Huazhu 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 Hilton Worldwide with a short position of Huazhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and Huazhu.
Diversification Opportunities for Hilton Worldwide and Huazhu
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hilton and Huazhu is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and Huazhu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huazhu Group and Hilton Worldwide 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 Hilton Worldwide Holdings are associated (or correlated) with Huazhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huazhu Group has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and Huazhu go up and down completely randomly.
Pair Corralation between Hilton Worldwide and Huazhu
Considering the 90-day investment horizon Hilton Worldwide is expected to generate 1.6 times less return on investment than Huazhu. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 1.88 times less risky than Huazhu. It trades about 0.04 of its potential returns per unit of risk. Huazhu Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,824 in Huazhu Group on January 25, 2024 and sell it today you would earn a total of 1,041 from holding Huazhu Group or generate 36.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. Huazhu Group
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| Huazhu Group |
Hilton Worldwide and Huazhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and Huazhu
The main advantage of trading using opposite Hilton Worldwide and Huazhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide position performs unexpectedly, Huazhu 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 Huazhu will offset losses from the drop in Huazhu's long position.| Hilton Worldwide vs. Yatra Online | Hilton Worldwide vs. Despegar Corp | Hilton Worldwide vs. Mondee Holdings | Hilton Worldwide vs. MakeMyTrip Limited |
| Huazhu vs. Yatra Online | Huazhu vs. Despegar Corp | Huazhu vs. Mondee Holdings | Huazhu vs. MakeMyTrip Limited |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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