Correlation Between MeVis Medical and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both MeVis Medical 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 MeVis Medical and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MeVis Medical Solutions and Playa Hotels Resorts, you can compare the effects of market volatilities on MeVis Medical 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 MeVis Medical with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeVis Medical and Playa Hotels.
Diversification Opportunities for MeVis Medical and Playa Hotels
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MeVis and Playa is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MeVis Medical Solutions 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 MeVis Medical 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 MeVis Medical Solutions 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 MeVis Medical i.e., MeVis Medical and Playa Hotels go up and down completely randomly.
Pair Corralation between MeVis Medical and Playa Hotels
Assuming the 90 days trading horizon MeVis Medical Solutions is expected to under-perform the Playa Hotels. But the stock apears to be less risky and, when comparing its historical volatility, MeVis Medical Solutions is 1.56 times less risky than Playa Hotels. The stock trades about -0.05 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 705.00 in Playa Hotels Resorts on August 27, 2024 and sell it today you would earn a total of 220.00 from holding Playa Hotels Resorts or generate 31.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MeVis Medical Solutions vs. Playa Hotels Resorts
Performance |
| Timeline |
| MeVis Medical Solutions |
| Playa Hotels Resorts |
MeVis Medical and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MeVis Medical and Playa Hotels
The main advantage of trading using opposite MeVis Medical and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeVis Medical 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.| MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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