Correlation Between Hitachi and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Hitachi 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 Hitachi and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi and Playa Hotels Resorts, you can compare the effects of market volatilities on Hitachi 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 Hitachi with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi and Playa Hotels.
Diversification Opportunities for Hitachi and Playa Hotels
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hitachi and Playa is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi 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 Hitachi 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 Hitachi 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 Hitachi i.e., Hitachi and Playa Hotels go up and down completely randomly.
Pair Corralation between Hitachi and Playa Hotels
Assuming the 90 days trading horizon Hitachi is expected to generate 1.04 times more return on investment than Playa Hotels. However, Hitachi is 1.04 times more volatile than Playa Hotels Resorts. It trades about 0.09 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 967.00 in Hitachi on August 29, 2024 and sell it today you would earn a total of 1,305 from holding Hitachi or generate 134.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hitachi vs. Playa Hotels Resorts
Performance |
| Timeline |
| Hitachi |
| Playa Hotels Resorts |
Hitachi and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi and Playa Hotels
The main advantage of trading using opposite Hitachi and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi 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.| Hitachi vs. ONWARD MEDICAL BV | Hitachi vs. SOLSTAD OFFSHORE NK | Hitachi vs. MEDICAL FACILITIES NEW | Hitachi vs. Diamyd Medical AB |
| Playa Hotels vs. Superior Plus Corp | Playa Hotels vs. NMI Holdings | Playa Hotels vs. Origin Agritech | Playa Hotels vs. SIVERS SEMICONDUCTORS AB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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