Correlation Between Compania Cervecerias and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias 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 Compania Cervecerias and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Cervecerias Unidas and Playa Hotels Resorts, you can compare the effects of market volatilities on Compania Cervecerias 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 Compania Cervecerias with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Playa Hotels.
Diversification Opportunities for Compania Cervecerias and Playa Hotels
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Compania and Playa is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas 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 Compania Cervecerias 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 Compania Cervecerias Unidas 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 Compania Cervecerias i.e., Compania Cervecerias and Playa Hotels go up and down completely randomly.
Pair Corralation between Compania Cervecerias and Playa Hotels
Considering the 90-day investment horizon Compania Cervecerias Unidas is expected to generate 0.76 times more return on investment than Playa Hotels. However, Compania Cervecerias Unidas is 1.31 times less risky than Playa Hotels. It trades about 0.37 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.11 per unit of risk. If you would invest 1,088 in Compania Cervecerias Unidas on September 12, 2024 and sell it today you would earn a total of 94.50 from holding Compania Cervecerias Unidas or generate 8.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Cervecerias Unidas vs. Playa Hotels Resorts
Performance |
| Timeline |
| Compania Cervecerias |
| Playa Hotels Resorts |
Compania Cervecerias and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Cervecerias and Playa Hotels
The main advantage of trading using opposite Compania Cervecerias and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias 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.| Compania Cervecerias vs. Fomento Economico Mexicano | Compania Cervecerias vs. Boston Beer | Compania Cervecerias vs. Carlsberg AS | Compania Cervecerias vs. Molson Coors Beverage |
| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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