Correlation Between Highlight Communications and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Highlight Communications 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 Highlight Communications and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Communications AG and Playa Hotels Resorts, you can compare the effects of market volatilities on Highlight Communications 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 Highlight Communications with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Playa Hotels.
Diversification Opportunities for Highlight Communications and Playa Hotels
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Highlight and Playa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG 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 Highlight Communications 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 Highlight Communications AG 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 Highlight Communications i.e., Highlight Communications and Playa Hotels go up and down completely randomly.
Pair Corralation between Highlight Communications and Playa Hotels
Assuming the 90 days trading horizon Highlight Communications AG is expected to generate 4.23 times more return on investment than Playa Hotels. However, Highlight Communications is 4.23 times more volatile than Playa Hotels Resorts. It trades about 0.25 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.01 per unit of risk. If you would invest 114.00 in Highlight Communications AG on October 30, 2024 and sell it today you would earn a total of 35.00 from holding Highlight Communications AG or generate 30.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. Playa Hotels Resorts
Performance |
| Timeline |
| Highlight Communications |
| Playa Hotels Resorts |
Highlight Communications and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and Playa Hotels
The main advantage of trading using opposite Highlight Communications and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications 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.| Highlight Communications vs. Keck Seng Investments | Highlight Communications vs. Gladstone Investment | Highlight Communications vs. CENTURIA OFFICE REIT | Highlight Communications vs. NURAN WIRELESS INC |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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