Correlation Between AEGEAN AIRLINES and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES 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 AEGEAN AIRLINES and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and Playa Hotels Resorts, you can compare the effects of market volatilities on AEGEAN AIRLINES 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 AEGEAN AIRLINES with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Playa Hotels.
Diversification Opportunities for AEGEAN AIRLINES and Playa Hotels
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AEGEAN and Playa is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES 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 AEGEAN AIRLINES 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 AEGEAN AIRLINES 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 AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Playa Hotels go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and Playa Hotels
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to under-perform the Playa Hotels. But the stock apears to be less risky and, when comparing its historical volatility, AEGEAN AIRLINES is 1.9 times less risky than Playa Hotels. The stock trades about -0.21 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 690.00 in Playa Hotels Resorts on August 29, 2024 and sell it today you would earn a total of 225.00 from holding Playa Hotels Resorts or generate 32.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. Playa Hotels Resorts
Performance |
| Timeline |
| AEGEAN AIRLINES |
| Playa Hotels Resorts |
AEGEAN AIRLINES and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and Playa Hotels
The main advantage of trading using opposite AEGEAN AIRLINES and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES 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.| AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Superior Plus Corp | AEGEAN AIRLINES vs. SIVERS SEMICONDUCTORS AB |
| Playa Hotels vs. Amkor Technology | Playa Hotels vs. Xinhua Winshare Publishing | Playa Hotels vs. Laureate Education | Playa Hotels vs. AECOM TECHNOLOGY |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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