Correlation Between Playa Hotels and China Health
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and China Health 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 China Health 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 China Health Industries, you can compare the effects of market volatilities on Playa Hotels and China Health 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 China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and China Health.
Diversification Opportunities for Playa Hotels and China Health
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playa and China is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and China Health Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Industries 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 China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Industries has no effect on the direction of Playa Hotels i.e., Playa Hotels and China Health go up and down completely randomly.
Pair Corralation between Playa Hotels and China Health
If you would invest 1,332 in Playa Hotels Resorts on January 12, 2025 and sell it today you would earn a total of 6.00 from holding Playa Hotels Resorts or generate 0.45% 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. China Health Industries
Performance |
| Timeline |
| Playa Hotels Resorts |
| China Health Industries |
Playa Hotels and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and China Health
The main advantage of trading using opposite Playa Hotels and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, China Health 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 China Health will offset losses from the drop in China Health's long position.| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
| China Health vs. RLX Technology | China Health vs. The Coca Cola | China Health vs. Diageo PLC ADR | China Health vs. Merit Medical Systems |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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