Correlation Between Eidesvik Offshore and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore 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 Eidesvik Offshore and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eidesvik Offshore ASA and Playa Hotels Resorts, you can compare the effects of market volatilities on Eidesvik Offshore 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 Eidesvik Offshore with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Playa Hotels.
Diversification Opportunities for Eidesvik Offshore and Playa Hotels
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eidesvik and Playa is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA 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 Eidesvik Offshore 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 Eidesvik Offshore ASA 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 Eidesvik Offshore i.e., Eidesvik Offshore and Playa Hotels go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and Playa Hotels
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Playa Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.84 times less risky than Playa Hotels. The stock trades about -0.09 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 775.00 in Playa Hotels Resorts on September 1, 2024 and sell it today you would earn a total of 135.00 from holding Playa Hotels Resorts or generate 17.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. Playa Hotels Resorts
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| Playa Hotels Resorts |
Eidesvik Offshore and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and Playa Hotels
The main advantage of trading using opposite Eidesvik Offshore and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore 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.| Eidesvik Offshore vs. BURLINGTON STORES | Eidesvik Offshore vs. Burlington Stores | Eidesvik Offshore vs. BJs Wholesale Club | Eidesvik Offshore vs. RETAIL FOOD GROUP |
| Playa Hotels vs. JJ SNACK FOODS | Playa Hotels vs. Suntory Beverage Food | Playa Hotels vs. Treasury Wine Estates | Playa Hotels vs. MOLSON RS BEVERAGE |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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