Correlation Between PT Global and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both PT Global and Playa Hotels 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 PT Global and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Global Mediacom and Playa Hotels Resorts, you can compare the effects of market volatilities on PT Global and Playa Hotels 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 PT Global with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and Playa Hotels.
Diversification Opportunities for PT Global and Playa Hotels
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 06L and Playa is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts and PT Global 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 PT Global Mediacom are associated (or correlated) with Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of PT Global i.e., PT Global and Playa Hotels go up and down completely randomly.
Pair Corralation between PT Global and Playa Hotels
Assuming the 90 days trading horizon PT Global Mediacom is expected to generate 5.23 times more return on investment than Playa Hotels. However, PT Global is 5.23 times more volatile than Playa Hotels Resorts. It trades about 0.02 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.06 per unit of risk. If you would invest 1.15 in PT Global Mediacom on September 3, 2024 and sell it today you would lose (0.40) from holding PT Global Mediacom or give up 34.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Global Mediacom vs. Playa Hotels Resorts
Performance |
| Timeline |
| PT Global Mediacom |
| Playa Hotels Resorts |
PT Global and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Global and Playa Hotels
The main advantage of trading using opposite PT Global and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Global position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.The idea behind PT Global Mediacom and Playa Hotels Resorts 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.| Playa Hotels vs. SBA Communications Corp | Playa Hotels vs. Datadog | Playa Hotels vs. Consolidated Communications Holdings | Playa Hotels vs. Ribbon Communications |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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