Correlation Between Playa Hotels and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals, you can compare the effects of market volatilities on Playa Hotels and Mitsui Chemicals 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 Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Mitsui Chemicals.
Diversification Opportunities for Playa Hotels and Mitsui Chemicals
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Playa and Mitsui is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals 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 Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of Playa Hotels i.e., Playa Hotels and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between Playa Hotels and Mitsui Chemicals
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 1.32 times more return on investment than Mitsui Chemicals. However, Playa Hotels is 1.32 times more volatile than Mitsui Chemicals. It trades about 0.25 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.07 per unit of risk. If you would invest 775.00 in Playa Hotels Resorts on September 1, 2024 and sell it today you would earn a total of 135.00 from holding Playa Hotels Resorts or generate 17.42% 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. Mitsui Chemicals
Performance |
| Timeline |
| Playa Hotels Resorts |
| Mitsui Chemicals |
Playa Hotels and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Mitsui Chemicals
The main advantage of trading using opposite Playa Hotels and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.| Playa Hotels vs. JJ SNACK FOODS | Playa Hotels vs. Suntory Beverage Food | Playa Hotels vs. Treasury Wine Estates | Playa Hotels vs. MOLSON RS BEVERAGE |
| Mitsui Chemicals vs. SIVERS SEMICONDUCTORS AB | Mitsui Chemicals vs. Darden Restaurants | Mitsui Chemicals vs. Reliance Steel Aluminum | Mitsui Chemicals vs. Q2M Managementberatung 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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