Correlation Between Cairo Communication and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Cairo Communication 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 Cairo Communication and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Communication SpA and Playa Hotels Resorts, you can compare the effects of market volatilities on Cairo Communication 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 Cairo Communication with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Playa Hotels.
Diversification Opportunities for Cairo Communication and Playa Hotels
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cairo and Playa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA 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 Cairo Communication 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 Cairo Communication SpA 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 Cairo Communication i.e., Cairo Communication and Playa Hotels go up and down completely randomly.
Pair Corralation between Cairo Communication and Playa Hotels
Assuming the 90 days trading horizon Cairo Communication is expected to generate 3.19 times less return on investment than Playa Hotels. But when comparing it to its historical volatility, Cairo Communication SpA is 2.22 times less risky than Playa Hotels. It trades about 0.1 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 920.00 in Playa Hotels Resorts on October 30, 2024 and sell it today you would earn a total of 240.00 from holding Playa Hotels Resorts or generate 26.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Playa Hotels Resorts
Performance |
| Timeline |
| Cairo Communication SpA |
| Playa Hotels Resorts |
Cairo Communication and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Playa Hotels
The main advantage of trading using opposite Cairo Communication and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication 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.| Cairo Communication vs. Heidelberg Materials AG | Cairo Communication vs. Rayonier Advanced Materials | Cairo Communication vs. MidCap Financial Investment | Cairo Communication vs. Plastic Omnium |
| Playa Hotels vs. United Breweries Co | Playa Hotels vs. Sanyo Chemical Industries | Playa Hotels vs. Quaker Chemical | Playa Hotels vs. X FAB Silicon Foundries |
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 Stocks Directory module to find actively traded stocks across global markets.
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