Correlation Between Playa Hotels and JAPAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES, you can compare the effects of market volatilities on Playa Hotels and JAPAN AIRLINES 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 JAPAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and JAPAN AIRLINES.
Diversification Opportunities for Playa Hotels and JAPAN AIRLINES
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playa and JAPAN is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and JAPAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN AIRLINES 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 JAPAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN AIRLINES has no effect on the direction of Playa Hotels i.e., Playa Hotels and JAPAN AIRLINES go up and down completely randomly.
Pair Corralation between Playa Hotels and JAPAN AIRLINES
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 2.11 times more return on investment than JAPAN AIRLINES. However, Playa Hotels is 2.11 times more volatile than JAPAN AIRLINES. It trades about 0.07 of its potential returns per unit of risk. JAPAN AIRLINES is currently generating about -0.05 per unit of risk. If you would invest 855.00 in Playa Hotels Resorts on October 12, 2024 and sell it today you would earn a total of 315.00 from holding Playa Hotels Resorts or generate 36.84% 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. JAPAN AIRLINES
Performance |
| Timeline |
| Playa Hotels Resorts |
| JAPAN AIRLINES |
Playa Hotels and JAPAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and JAPAN AIRLINES
The main advantage of trading using opposite Playa Hotels and JAPAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, JAPAN AIRLINES 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 JAPAN AIRLINES will offset losses from the drop in JAPAN AIRLINES's long position.| Playa Hotels vs. DEVRY EDUCATION GRP | Playa Hotels vs. Laureate Education | Playa Hotels vs. EVS Broadcast Equipment | Playa Hotels vs. COPLAND ROAD CAPITAL |
| JAPAN AIRLINES vs. National Beverage Corp | JAPAN AIRLINES vs. INDOFOOD AGRI RES | JAPAN AIRLINES vs. GRIFFIN MINING LTD | JAPAN AIRLINES vs. VIVA WINE GROUP |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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