Correlation Between Playa Hotels and Roma Green
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Roma Green 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 Roma Green 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 Roma Green Finance, you can compare the effects of market volatilities on Playa Hotels and Roma Green 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 Roma Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Roma Green.
Diversification Opportunities for Playa Hotels and Roma Green
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playa and Roma is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Playa Hotels i.e., Playa Hotels and Roma Green go up and down completely randomly.
Pair Corralation between Playa Hotels and Roma Green
Given the investment horizon of 90 days Playa Hotels is expected to generate 8.07 times less return on investment than Roma Green. But when comparing it to its historical volatility, Playa Hotels Resorts is 14.43 times less risky than Roma Green. It trades about 0.17 of its potential returns per unit of risk. Roma Green Finance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Roma Green Finance on December 8, 2024 and sell it today you would earn a total of 7.20 from holding Roma Green Finance or generate 10.59% 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. Roma Green Finance
Performance |
| Timeline |
| Playa Hotels Resorts |
| Roma Green Finance |
Playa Hotels and Roma Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and Roma Green
The main advantage of trading using opposite Playa Hotels and Roma Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Roma Green 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 Roma Green will offset losses from the drop in Roma Green's long position.| Playa Hotels vs. Golden Entertainment | ||
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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