Correlation Between Playa Hotels and SILEON AB

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

Diversification Opportunities for Playa Hotels and SILEON AB

-0.1

Correlation Coefficient

Playa Hotels  SILEON AB

Good diversification

The 3 months correlation between Playa and SILEON is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and SILEON AB ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILEON AB ON 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 SILEON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILEON AB ON has no effect on the direction of Playa Hotels i.e., Playa Hotels and SILEON AB go up and down completely randomly.

Pair Corralation between Playa Hotels and SILEON AB

Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 1.39 times more return on investment than SILEON AB. However, Playa Hotels is 1.39 times more volatile than SILEON AB ON. It trades about 0.2 of its potential returns per unit of risk. SILEON AB ON is currently generating about -0.52 per unit of risk. If you would invest  950.00  in Playa Hotels Resorts on October 11, 2024 and sell it today you would earn a total of  220.00  from holding Playa Hotels Resorts or generate 23.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Playa Hotels Resorts  vs.  SILEON AB ON

Playa Hotels Resorts

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Playa Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

SILEON AB ON

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SILEON AB ON are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SILEON AB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playa Hotels and SILEON AB

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

The idea behind Playa Hotels Resorts and SILEON AB ON 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..