Correlation Between Playa Hotels and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural, you can compare the effects of market volatilities on Playa Hotels and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Australian Agricultural.
Diversification Opportunities for Playa Hotels and Australian Agricultural
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playa and Australian is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Playa Hotels i.e., Playa Hotels and Australian Agricultural go up and down completely randomly.
Pair Corralation between Playa Hotels and Australian Agricultural
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.98 times more return on investment than Australian Agricultural. However, Playa Hotels Resorts is 1.02 times less risky than Australian Agricultural. It trades about 0.06 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.02 per unit of risk. If you would invest 565.00 in Playa Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 355.00 from holding Playa Hotels Resorts or generate 62.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Australian Agricultural
Performance |
| Timeline |
| Playa Hotels Resorts |
| Australian Agricultural |
Playa Hotels and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Australian Agricultural
The main advantage of trading using opposite Playa Hotels and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Playa Hotels vs. United States Steel | Playa Hotels vs. RELIANCE STEEL AL | Playa Hotels vs. Insteel Industries | Playa Hotels vs. TELES Informationstechnologien AG |
| Australian Agricultural vs. SalMar ASA | Australian Agricultural vs. Superior Plus Corp | Australian Agricultural vs. NMI Holdings | Australian Agricultural vs. Origin Agritech |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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