Correlation Between Monarch Casino and Trip Group

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

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

Diversification Opportunities for Monarch Casino and Trip Group

-0.61

Correlation Coefficient

Monarch Casino  Trip Group

Excellent diversification

The 3 months correlation between Monarch and Trip is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Monarch Casino Resort and Trip Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group and Monarch Casino 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 Monarch Casino Resort are associated (or correlated) with Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group has no effect on the direction of Monarch Casino i.e., Monarch Casino and Trip Group go up and down completely randomly.

Pair Corralation between Monarch Casino and Trip Group

Given the investment horizon of 90 days Monarch Casino Resort is expected to generate 0.6 times more return on investment than Trip Group. However, Monarch Casino Resort is 1.66 times less risky than Trip Group. It trades about -0.11 of its potential returns per unit of risk. Trip Group Ltd is currently generating about -0.09 per unit of risk. If you would invest  6,870  in Monarch Casino Resort on March 4, 2024 and sell it today you would lose (173.00) from holding Monarch Casino Resort or give up 2.52% of portfolio value over 90 days.

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

Monarch Casino Resort  vs.  Trip Group Ltd

Monarch Casino Resort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monarch Casino Resort has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Monarch Casino is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Trip Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trip Group Ltd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Trip Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monarch Casino and Trip Group

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

The idea behind Monarch Casino Resort and Trip Group Ltd 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.