Correlation Between Playa Hotels and 059438AG6

Can any of the company-specific risk be diversified away by investing in both Playa Hotels and 059438AG6 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 059438AG6 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 BANC ONE P, you can compare the effects of market volatilities on Playa Hotels and 059438AG6 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 059438AG6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and 059438AG6.

Diversification Opportunities for Playa Hotels and 059438AG6

-0.79

Correlation Coefficient

Playa Hotels  059438AG6

Pay attention - limited upside

The 3 months correlation between Playa and 059438AG6 is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and BANC ONE P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANC ONE P 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 059438AG6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANC ONE P has no effect on the direction of Playa Hotels i.e., Playa Hotels and 059438AG6 go up and down completely randomly.

Pair Corralation between Playa Hotels and 059438AG6

Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 7.63 times more return on investment than 059438AG6. However, Playa Hotels is 7.63 times more volatile than BANC ONE P. It trades about 0.22 of its potential returns per unit of risk. BANC ONE P is currently generating about 0.01 per unit of risk. If you would invest  771.00  in Playa Hotels Resorts on September 4, 2024 and sell it today you would earn a total of  209.00  from holding Playa Hotels Resorts or generate 27.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Playa Hotels Resorts  vs.  BANC ONE P

Playa Hotels Resorts

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Playa Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

BANC ONE P

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BANC ONE P are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 059438AG6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Playa Hotels and 059438AG6

The main advantage of trading using opposite Playa Hotels and 059438AG6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, 059438AG6 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 059438AG6 will offset losses from the drop in 059438AG6's long position.

The idea behind Playa Hotels Resorts and BANC ONE P 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.