Correlation Between Playa Hotels and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Bausch Health 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 Bausch Health 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 Bausch Health Companies, you can compare the effects of market volatilities on Playa Hotels and Bausch Health 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 Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Bausch Health.
Diversification Opportunities for Playa Hotels and Bausch Health
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Playa and Bausch is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies 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 Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Playa Hotels i.e., Playa Hotels and Bausch Health go up and down completely randomly.
Pair Corralation between Playa Hotels and Bausch Health
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 0.77 times more return on investment than Bausch Health. However, Playa Hotels Resorts is 1.29 times less risky than Bausch Health. It trades about 0.2 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.01 per unit of risk. If you would invest 695.00 in Playa Hotels Resorts on September 25, 2024 and sell it today you would earn a total of 225.00 from holding Playa Hotels Resorts or generate 32.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Playa Hotels Resorts vs. Bausch Health Companies
Performance |
Timeline |
Playa Hotels Resorts |
Bausch Health Companies |
Playa Hotels and Bausch Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playa Hotels and Bausch Health
The main advantage of trading using opposite Playa Hotels and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Bausch Health 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 Bausch Health will offset losses from the drop in Bausch Health's long position.Playa Hotels vs. CHINA TELECOM H | Playa Hotels vs. Major Drilling Group | Playa Hotels vs. Comba Telecom Systems | Playa Hotels vs. MINCO SILVER |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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