Correlation Between Playa Hotels and Prosafe SE
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Prosafe SE 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 Playa Hotels and Prosafe SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playa Hotels Resorts and Prosafe SE, you can compare the effects of market volatilities on Playa Hotels and Prosafe SE 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 Playa Hotels with a short position of Prosafe SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Prosafe SE.
Diversification Opportunities for Playa Hotels and Prosafe SE
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and Prosafe is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Prosafe SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosafe SE and Playa Hotels 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 Playa Hotels Resorts are associated (or correlated) with Prosafe SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosafe SE has no effect on the direction of Playa Hotels i.e., Playa Hotels and Prosafe SE go up and down completely randomly.
Pair Corralation between Playa Hotels and Prosafe SE
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.32 times more return on investment than Prosafe SE. However, Playa Hotels Resorts is 3.1 times less risky than Prosafe SE. It trades about 0.05 of its potential returns per unit of risk. Prosafe SE is currently generating about -0.05 per unit of risk. If you would invest 730.00 in Playa Hotels Resorts on November 7, 2024 and sell it today you would earn a total of 440.00 from holding Playa Hotels Resorts or generate 60.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Prosafe SE
Performance |
| Timeline |
| Playa Hotels Resorts |
| Prosafe SE |
Playa Hotels and Prosafe SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Prosafe SE
The main advantage of trading using opposite Playa Hotels and Prosafe SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Prosafe SE 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 Prosafe SE will offset losses from the drop in Prosafe SE's long position.| Playa Hotels vs. DELTA AIR LINES | Playa Hotels vs. Air New Zealand | Playa Hotels vs. Firan Technology Group | Playa Hotels vs. X FAB Silicon Foundries |
| Prosafe SE vs. Schlumberger Limited | Prosafe SE vs. Halliburton | Prosafe SE vs. Tenaris SA | Prosafe SE vs. China Oilfield Services |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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