Correlation Between Playa Hotels and Chemours
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Chemours 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 Chemours 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 Chemours Co, you can compare the effects of market volatilities on Playa Hotels and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Chemours.
Diversification Opportunities for Playa Hotels and Chemours
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playa and Chemours is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Playa Hotels i.e., Playa Hotels and Chemours go up and down completely randomly.
Pair Corralation between Playa Hotels and Chemours
Given the investment horizon of 90 days Playa Hotels is expected to generate 1.37 times less return on investment than Chemours. But when comparing it to its historical volatility, Playa Hotels Resorts is 1.99 times less risky than Chemours. It trades about 0.25 of its potential returns per unit of risk. Chemours Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,808 in Chemours Co on August 26, 2024 and sell it today you would earn a total of 272.00 from holding Chemours Co or generate 15.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Chemours Co
Performance |
| Timeline |
| Playa Hotels Resorts |
| Chemours |
Playa Hotels and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Chemours
The main advantage of trading using opposite Playa Hotels and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| Playa Hotels vs. Yatra Online | Playa Hotels vs. Despegar Corp | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited |
| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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