Correlation Between Playa Hotels and LION ONE
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on Playa Hotels and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and LION ONE.
Diversification Opportunities for Playa Hotels and LION ONE
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Playa and LION is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Playa Hotels i.e., Playa Hotels and LION ONE go up and down completely randomly.
Pair Corralation between Playa Hotels and LION ONE
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.86 times more return on investment than LION ONE. However, Playa Hotels Resorts is 1.16 times less risky than LION ONE. It trades about 0.2 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.15 per unit of risk. If you would invest 805.00 in Playa Hotels Resorts on August 29, 2024 and sell it today you would earn a total of 110.00 from holding Playa Hotels Resorts or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Playa Hotels Resorts vs. LION ONE METALS
Performance |
| Timeline |
| Playa Hotels Resorts |
| LION ONE METALS |
Playa Hotels and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and LION ONE
The main advantage of trading using opposite Playa Hotels and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| Playa Hotels vs. Amkor Technology | Playa Hotels vs. Xinhua Winshare Publishing | Playa Hotels vs. Laureate Education | Playa Hotels vs. AECOM TECHNOLOGY |
| LION ONE vs. Apple Inc | LION ONE vs. Apple Inc | LION ONE vs. Superior Plus Corp | LION ONE vs. SIVERS SEMICONDUCTORS AB |
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 Stocks Directory module to find actively traded stocks across global markets.
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