Correlation Between Playa Hotels and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Freedom Holding 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 Freedom Holding 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 Freedom Holding Corp, you can compare the effects of market volatilities on Playa Hotels and Freedom Holding 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 Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Freedom Holding.
Diversification Opportunities for Playa Hotels and Freedom Holding
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Playa and Freedom is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Playa Hotels i.e., Playa Hotels and Freedom Holding go up and down completely randomly.
Pair Corralation between Playa Hotels and Freedom Holding
Given the investment horizon of 90 days Playa Hotels is expected to generate 2.86 times less return on investment than Freedom Holding. But when comparing it to its historical volatility, Playa Hotels Resorts is 1.11 times less risky than Freedom Holding. It trades about 0.07 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,595 in Freedom Holding Corp on September 1, 2024 and sell it today you would earn a total of 4,293 from holding Freedom Holding Corp or generate 56.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Freedom Holding Corp
Performance |
| Timeline |
| Playa Hotels Resorts |
| Freedom Holding Corp |
Playa Hotels and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Freedom Holding
The main advantage of trading using opposite Playa Hotels and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Freedom Holding 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 Freedom Holding will offset losses from the drop in Freedom Holding's long position.| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. MakeMyTrip Limited | Playa Hotels vs. Tuniu Corp |
| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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