Correlation Between Playa Hotels and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on Playa Hotels and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Kaiser Aluminum.
Diversification Opportunities for Playa Hotels and Kaiser Aluminum
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and Kaiser is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Playa Hotels i.e., Playa Hotels and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Playa Hotels and Kaiser Aluminum
Given the investment horizon of 90 days Playa Hotels Resorts is expected to under-perform the Kaiser Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Playa Hotels Resorts is 1.19 times less risky than Kaiser Aluminum. The stock trades about -0.07 of its potential returns per unit of risk. The Kaiser Aluminum is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,953 in Kaiser Aluminum on November 3, 2024 and sell it today you would earn a total of 47.00 from holding Kaiser Aluminum or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. Kaiser Aluminum
Performance |
| Timeline |
| Playa Hotels Resorts |
| Kaiser Aluminum |
Playa Hotels and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Kaiser Aluminum
The main advantage of trading using opposite Playa Hotels and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum'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 |
| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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