Correlation Between Everi Holdings and Huazhu

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

By analyzing existing cross correlation between Everi Holdings and Huazhu Group, you can compare the effects of market volatilities on Everi Holdings 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 Everi Holdings with a short position of Huazhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everi Holdings and Huazhu.

Diversification Opportunities for Everi Holdings and Huazhu

-0.52

Correlation Coefficient

Everi Holdings  Huazhu

Excellent diversification

The 3 months correlation between Everi and Huazhu is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and Huazhu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huazhu Group and Everi Holdings 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 Everi 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 Everi Holdings i.e., Everi Holdings and Huazhu go up and down completely randomly.

Pair Corralation between Everi Holdings and Huazhu

Given the investment horizon of 90 days Everi Holdings is expected to under-perform the Huazhu. But the stock apears to be less risky and, when comparing its historical volatility, Everi Holdings is 1.01 times less risky than Huazhu. The stock trades about -0.44 of its potential returns per unit of risk. The Huazhu Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,910  in Huazhu Group on January 30, 2024 and sell it today you would earn a total of  3.00  from holding Huazhu Group or generate 0.08% return on investment over 90 days.

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

Everi Holdings  vs.  Huazhu Group

Everi Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everi Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Huazhu Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huazhu Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, Huazhu unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everi Holdings and Huazhu

The main advantage of trading using opposite Everi Holdings and Huazhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everi Holdings 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.

The idea behind Everi Holdings and Huazhu Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..