Correlation Between CHINA TELECOM and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both CHINA TELECOM and Playa Hotels 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 CHINA TELECOM and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TELECOM H and Playa Hotels Resorts, you can compare the effects of market volatilities on CHINA TELECOM and Playa Hotels 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 CHINA TELECOM with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TELECOM and Playa Hotels.
Diversification Opportunities for CHINA TELECOM and Playa Hotels
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Playa is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TELECOM H and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts and CHINA TELECOM 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 CHINA TELECOM H are associated (or correlated) with Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of CHINA TELECOM i.e., CHINA TELECOM and Playa Hotels go up and down completely randomly.
Pair Corralation between CHINA TELECOM and Playa Hotels
If you would invest 52.00 in CHINA TELECOM H on September 26, 2024 and sell it today you would earn a total of 0.00 from holding CHINA TELECOM H or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA TELECOM H vs. Playa Hotels Resorts
Performance |
| Timeline |
| CHINA TELECOM H |
| Playa Hotels Resorts |
CHINA TELECOM and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TELECOM and Playa Hotels
The main advantage of trading using opposite CHINA TELECOM and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TELECOM position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| CHINA TELECOM vs. TRAVEL LEISURE DL 01 | CHINA TELECOM vs. Goodyear Tire Rubber | CHINA TELECOM vs. ANTA SPORTS PRODUCT | CHINA TELECOM vs. Rayonier Advanced Materials |
| Playa Hotels vs. Las Vegas Sands | Playa Hotels vs. Galaxy Entertainment Group | Playa Hotels vs. Sands China | Playa Hotels vs. MGM Resorts International |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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