Correlation Between Paiute Oil and Playa Hotels

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

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

Diversification Opportunities for Paiute Oil and Playa Hotels

-0.79

Correlation Coefficient

Paiute Oil  Playa Hotels

Pay attention - limited upside

The 3 months correlation between Paiute and Playa is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Paiute Oil Mining 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 Paiute Oil 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 Paiute Oil Mining 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 Paiute Oil i.e., Paiute Oil and Playa Hotels go up and down completely randomly.

Pair Corralation between Paiute Oil and Playa Hotels

Assuming the 90 days horizon Paiute Oil Mining is expected to generate 30.79 times more return on investment than Playa Hotels. However, Paiute Oil is 30.79 times more volatile than Playa Hotels Resorts. It trades about 0.06 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  0.01  in Paiute Oil Mining on October 21, 2024 and sell it today you would lose (0.01) from holding Paiute Oil Mining or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.53%
Values	Daily Returns

Paiute Oil Mining  vs.  Playa Hotels Resorts

Paiute Oil Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paiute Oil Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Playa Hotels Resorts

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 13 (%) 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 Paiute Oil and Playa Hotels

The main advantage of trading using opposite Paiute Oil and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paiute Oil 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 Paiute Oil Mining 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.