Correlation Between Playa Hotels and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Singapore 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 Singapore 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 Singapore Airlines Limited, you can compare the effects of market volatilities on Playa Hotels and Singapore 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Singapore Airlines.
Diversification Opportunities for Playa Hotels and Singapore Airlines
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Playa and Singapore is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Playa Hotels i.e., Playa Hotels and Singapore Airlines go up and down completely randomly.
Pair Corralation between Playa Hotels and Singapore Airlines
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 1.4 times more return on investment than Singapore Airlines. However, Playa Hotels is 1.4 times more volatile than Singapore Airlines Limited. It trades about 0.06 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.05 per unit of risk. If you would invest 570.00 in Playa Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 350.00 from holding Playa Hotels Resorts or generate 61.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Singapore Airlines Limited
Performance |
| Timeline |
| Playa Hotels Resorts |
| Singapore Airlines |
Playa Hotels and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Singapore Airlines
The main advantage of trading using opposite Playa Hotels and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Singapore 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| Playa Hotels vs. SBA Communications Corp | Playa Hotels vs. Datadog | Playa Hotels vs. Consolidated Communications Holdings | Playa Hotels vs. Ribbon Communications |
| Singapore Airlines vs. Delta Air Lines | Singapore Airlines vs. AIR CHINA LTD | Singapore Airlines vs. RYANAIR HLDGS ADR | Singapore Airlines vs. Southwest Airlines Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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