Correlation Between Playa Hotels and AP Møller
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and AP Møller 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 AP Møller 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 AP Mller , you can compare the effects of market volatilities on Playa Hotels and AP Møller 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 AP Møller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and AP Møller.
Diversification Opportunities for Playa Hotels and AP Møller
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Playa and DP4B is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Møller 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 AP Møller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Møller has no effect on the direction of Playa Hotels i.e., Playa Hotels and AP Møller go up and down completely randomly.
Pair Corralation between Playa Hotels and AP Møller
Assuming the 90 days horizon Playa Hotels is expected to generate 1.06 times less return on investment than AP Møller. But when comparing it to its historical volatility, Playa Hotels Resorts is 2.01 times less risky than AP Møller. It trades about 0.06 of its potential returns per unit of risk. AP Mller is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 123,381 in AP Mller on September 12, 2024 and sell it today you would earn a total of 42,269 from holding AP Mller or generate 34.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. AP Mller
Performance |
| Timeline |
| Playa Hotels Resorts |
| AP Møller |
Playa Hotels and AP Møller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and AP Møller
The main advantage of trading using opposite Playa Hotels and AP Møller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, AP Møller 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 AP Møller will offset losses from the drop in AP Møller's long position.| Playa Hotels vs. Sands China | Playa Hotels vs. Superior Plus Corp | Playa Hotels vs. SIVERS SEMICONDUCTORS AB | Playa Hotels vs. Norsk Hydro ASA |
| AP Møller vs. Superior Plus Corp | AP Møller vs. SIVERS SEMICONDUCTORS AB | AP Møller vs. CHINA HUARONG ENERHD 50 | AP Møller vs. NORDIC HALIBUT AS |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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