Correlation Between Todos Medical and Playa Hotels

Can any of the company-specific risk be diversified away by investing in both Todos Medical 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 Todos Medical and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Todos Medical and Playa Hotels Resorts, you can compare the effects of market volatilities on Todos Medical 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 Todos Medical with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Todos Medical and Playa Hotels.

Diversification Opportunities for Todos Medical and Playa Hotels

0.0

Correlation Coefficient

Todos Medical  Playa Hotels

Pay attention - limited upside

The 3 months correlation between Todos and Playa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Todos Medical 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 Todos Medical 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 Todos Medical 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 Todos Medical i.e., Todos Medical and Playa Hotels go up and down completely randomly.

Pair Corralation between Todos Medical and Playa Hotels

Assuming the 90 days horizon Todos Medical is expected to generate 26.96 times more return on investment than Playa Hotels. However, Todos Medical is 26.96 times more volatile than Playa Hotels Resorts. It trades about 0.04 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.06 per unit of risk. If you would invest  0.90  in Todos Medical on September 23, 2024 and sell it today you would lose (0.90) from holding Todos Medical or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Todos Medical  vs.  Playa Hotels Resorts

Todos Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Todos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Todos Medical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Playa Hotels Resorts

Risk-Adjusted Performance

14 of 100

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 somewhat unfluctuating basic indicators, Playa Hotels sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Todos Medical and Playa Hotels

The main advantage of trading using opposite Todos Medical and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Todos Medical 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 Todos Medical 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.