Correlation Between Playa Hotels and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and China BlueChemical 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 BlueChemical 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 BlueChemical, you can compare the effects of market volatilities on Playa Hotels and China BlueChemical 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 BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and China BlueChemical.
Diversification Opportunities for Playa Hotels and China BlueChemical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playa and China is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Playa Hotels i.e., Playa Hotels and China BlueChemical go up and down completely randomly.
Pair Corralation between Playa Hotels and China BlueChemical
Assuming the 90 days horizon Playa Hotels is expected to generate 8.83 times less return on investment than China BlueChemical. But when comparing it to its historical volatility, Playa Hotels Resorts is 2.51 times less risky than China BlueChemical. It trades about 0.04 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 24.00 in China BlueChemical on October 26, 2024 and sell it today you would earn a total of 2.00 from holding China BlueChemical or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. China BlueChemical
Performance |
| Timeline |
| Playa Hotels Resorts |
| China BlueChemical |
Playa Hotels and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and China BlueChemical
The main advantage of trading using opposite Playa Hotels and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| Playa Hotels vs. Las Vegas Sands | Playa Hotels vs. Galaxy Entertainment Group | Playa Hotels vs. Sands China | Playa Hotels vs. MGM Resorts International |
| China BlueChemical vs. Corteva | China BlueChemical vs. Nutrien | China BlueChemical vs. The Mosaic | China BlueChemical vs. CF Industries Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |