Correlation Between Playa Hotels and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and STMicroelectronics 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 STMicroelectronics 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 STMicroelectronics NV, you can compare the effects of market volatilities on Playa Hotels and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and STMicroelectronics.
Diversification Opportunities for Playa Hotels and STMicroelectronics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and STMicroelectronics is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Playa Hotels i.e., Playa Hotels and STMicroelectronics go up and down completely randomly.
Pair Corralation between Playa Hotels and STMicroelectronics
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 1.17 times more return on investment than STMicroelectronics. However, Playa Hotels is 1.17 times more volatile than STMicroelectronics NV. It trades about 0.26 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.06 per unit of risk. If you would invest 695.00 in Playa Hotels Resorts on August 28, 2024 and sell it today you would earn a total of 230.00 from holding Playa Hotels Resorts or generate 33.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. STMicroelectronics NV
Performance |
| Timeline |
| Playa Hotels Resorts |
| STMicroelectronics |
Playa Hotels and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and STMicroelectronics
The main advantage of trading using opposite Playa Hotels and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Playa Hotels vs. Superior Plus Corp | Playa Hotels vs. NMI Holdings | Playa Hotels vs. Origin Agritech | Playa Hotels vs. SIVERS SEMICONDUCTORS AB |
| STMicroelectronics vs. Align Technology | STMicroelectronics vs. JJ SNACK FOODS | STMicroelectronics vs. Wayside Technology Group | STMicroelectronics vs. Austevoll Seafood ASA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |