Correlation Between Playa Hotels and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Gamma Communications 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 Gamma Communications 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 Gamma Communications plc, you can compare the effects of market volatilities on Playa Hotels and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Gamma Communications.
Diversification Opportunities for Playa Hotels and Gamma Communications
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playa and Gamma is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of Playa Hotels i.e., Playa Hotels and Gamma Communications go up and down completely randomly.
Pair Corralation between Playa Hotels and Gamma Communications
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.94 times more return on investment than Gamma Communications. However, Playa Hotels Resorts is 1.06 times less risky than Gamma Communications. It trades about 0.14 of its potential returns per unit of risk. Gamma Communications plc is currently generating about 0.06 per unit of risk. If you would invest 915.00 in Playa Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 35.00 from holding Playa Hotels Resorts or generate 3.83% 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. Gamma Communications plc
Performance |
| Timeline |
| Playa Hotels Resorts |
| Gamma Communications plc |
Playa Hotels and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Gamma Communications
The main advantage of trading using opposite Playa Hotels and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Playa Hotels vs. Harmony Gold Mining | Playa Hotels vs. Vastned Retail NV | Playa Hotels vs. Lion One Metals | Playa Hotels vs. Fast Retailing Co |
| Gamma Communications vs. Lamar Advertising | Gamma Communications vs. CARSALESCOM | Gamma Communications vs. Ribbon Communications | Gamma Communications vs. Charter Communications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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