Correlation Between GRIFFIN MINING and Playa Hotels

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Can any of the company-specific risk be diversified away by investing in both GRIFFIN MINING 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 GRIFFIN MINING and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GRIFFIN MINING LTD and Playa Hotels Resorts, you can compare the effects of market volatilities on GRIFFIN MINING 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 GRIFFIN MINING with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRIFFIN MINING and Playa Hotels.

Diversification Opportunities for GRIFFIN MINING and Playa Hotels

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between GRIFFIN and Playa is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GRIFFIN MINING LTD 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 GRIFFIN MINING 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 GRIFFIN MINING LTD 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 GRIFFIN MINING i.e., GRIFFIN MINING and Playa Hotels go up and down completely randomly.

Pair Corralation between GRIFFIN MINING and Playa Hotels

Assuming the 90 days horizon GRIFFIN MINING LTD is expected to under-perform the Playa Hotels. But the stock apears to be less risky and, when comparing its historical volatility, GRIFFIN MINING LTD is 1.19 times less risky than Playa Hotels. The stock trades about -0.01 of its potential returns per unit of risk. The Playa Hotels Resorts is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  710.00  in Playa Hotels Resorts on September 24, 2024 and sell it today you would earn a total of  210.00  from holding Playa Hotels Resorts or generate 29.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GRIFFIN MINING LTD  vs.  Playa Hotels Resorts

 Performance 
       Timeline  
GRIFFIN MINING LTD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GRIFFIN MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GRIFFIN MINING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Playa Hotels Resorts 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Playa Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

GRIFFIN MINING and Playa Hotels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GRIFFIN MINING and Playa Hotels

The main advantage of trading using opposite GRIFFIN MINING and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRIFFIN MINING 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.
The idea behind GRIFFIN MINING LTD and Playa Hotels Resorts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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