Correlation Between China Datang and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both China Datang 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 China Datang and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and Playa Hotels Resorts, you can compare the effects of market volatilities on China Datang 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 China Datang with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Datang and Playa Hotels.
Diversification Opportunities for China Datang and Playa Hotels
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Playa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding China Datang 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 China Datang 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 China Datang 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 China Datang i.e., China Datang and Playa Hotels go up and down completely randomly.
Pair Corralation between China Datang and Playa Hotels
Assuming the 90 days horizon China Datang is expected to generate 2.05 times less return on investment than Playa Hotels. In addition to that, China Datang is 1.59 times more volatile than Playa Hotels Resorts. It trades about 0.01 of its total potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.04 per unit of volatility. If you would invest 1,170 in Playa Hotels Resorts on October 25, 2024 and sell it today you would earn a total of 10.00 from holding Playa Hotels Resorts or generate 0.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
China Datang vs. Playa Hotels Resorts
Performance |
Timeline |
China Datang |
Playa Hotels Resorts |
China Datang and Playa Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Datang and Playa Hotels
The main advantage of trading using opposite China Datang and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Datang 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.China Datang vs. Charter Communications | China Datang vs. OPERA SOFTWARE | China Datang vs. FORMPIPE SOFTWARE AB | China Datang vs. USU Software AG |
Playa Hotels vs. National Beverage Corp | Playa Hotels vs. Merit Medical Systems | Playa Hotels vs. The Boston Beer | Playa Hotels vs. PEPTONIC MEDICAL |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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