Correlation Between Playa Hotels and Central Japan
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Central Japan 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 Central Japan 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 Central Japan Railway, you can compare the effects of market volatilities on Playa Hotels and Central Japan 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 Central Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Central Japan.
Diversification Opportunities for Playa Hotels and Central Japan
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Playa and Central is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Central Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Japan Railway 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 Central Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Japan Railway has no effect on the direction of Playa Hotels i.e., Playa Hotels and Central Japan go up and down completely randomly.
Pair Corralation between Playa Hotels and Central Japan
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 5.41 times more return on investment than Central Japan. However, Playa Hotels is 5.41 times more volatile than Central Japan Railway. It trades about 0.23 of its potential returns per unit of risk. Central Japan Railway is currently generating about -0.24 per unit of risk. If you would invest 945.00 in Playa Hotels Resorts on October 15, 2024 and sell it today you would earn a total of 255.00 from holding Playa Hotels Resorts or generate 26.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Central Japan Railway
Performance |
| Timeline |
| Playa Hotels Resorts |
| Central Japan Railway |
Playa Hotels and Central Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Central Japan
The main advantage of trading using opposite Playa Hotels and Central Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Central Japan 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 Central Japan will offset losses from the drop in Central Japan's long position.| Playa Hotels vs. Aristocrat Leisure Limited | Playa Hotels vs. Air Transport Services | Playa Hotels vs. Gaming and Leisure | Playa Hotels vs. Forsys Metals Corp |
| Central Japan vs. DALATA HOTEL | Central Japan vs. CARSALESCOM | Central Japan vs. COVIVIO HOTELS INH | Central Japan vs. Playa Hotels Resorts |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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