Correlation Between Playa Hotels and China Datang
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and China Datang 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 China Datang 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 China Datang, you can compare the effects of market volatilities on Playa Hotels and China Datang 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 China Datang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and China Datang.
Diversification Opportunities for Playa Hotels and China Datang
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playa and China is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Datang 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 China Datang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Datang has no effect on the direction of Playa Hotels i.e., Playa Hotels and China Datang go up and down completely randomly.
Pair Corralation between Playa Hotels and China Datang
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.63 times more return on investment than China Datang. However, Playa Hotels Resorts is 1.59 times less risky than China Datang. It trades about 0.04 of its potential returns per unit of risk. China Datang is currently generating about 0.01 per unit of risk. If you would invest 1,170 in Playa Hotels Resorts on October 25, 2024 and sell it today you would earn a total of 10.00 from holding Playa Hotels Resorts or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. China Datang
Performance |
| Timeline |
| Playa Hotels Resorts |
| China Datang |
Playa Hotels and China Datang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and China Datang
The main advantage of trading using opposite Playa Hotels and China Datang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, China Datang 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 China Datang will offset losses from the drop in China Datang's long position.| Playa Hotels vs. National Beverage Corp | Playa Hotels vs. Merit Medical Systems | Playa Hotels vs. The Boston Beer | Playa Hotels vs. PEPTONIC MEDICAL |
| China Datang vs. Charter Communications | China Datang vs. OPERA SOFTWARE | China Datang vs. FORMPIPE SOFTWARE AB | China Datang vs. USU Software AG |
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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