Correlation Between NEXON Co and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both NEXON Co 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 NEXON Co and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXON Co and Playa Hotels Resorts, you can compare the effects of market volatilities on NEXON Co 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 NEXON Co with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXON Co and Playa Hotels.
Diversification Opportunities for NEXON Co and Playa Hotels
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NEXON and Playa is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding NEXON Co 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 NEXON Co 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 NEXON Co 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 NEXON Co i.e., NEXON Co and Playa Hotels go up and down completely randomly.
Pair Corralation between NEXON Co and Playa Hotels
Assuming the 90 days horizon NEXON Co is expected to generate 2.75 times more return on investment than Playa Hotels. However, NEXON Co is 2.75 times more volatile than Playa Hotels Resorts. It trades about 0.06 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 438.00 in NEXON Co on September 4, 2024 and sell it today you would earn a total of 872.00 from holding NEXON Co or generate 199.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXON Co vs. Playa Hotels Resorts
Performance |
| Timeline |
| NEXON Co |
| Playa Hotels Resorts |
NEXON Co and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXON Co and Playa Hotels
The main advantage of trading using opposite NEXON Co and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXON Co 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.| NEXON Co vs. Playa Hotels Resorts | NEXON Co vs. SEI INVESTMENTS | NEXON Co vs. Chuangs China Investments | NEXON Co vs. HK Electric Investments |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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