Correlation Between Playa Hotels and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and Cairo Communication 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 Cairo Communication 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 Cairo Communication SpA, you can compare the effects of market volatilities on Playa Hotels and Cairo Communication 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 Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and Cairo Communication.
Diversification Opportunities for Playa Hotels and Cairo Communication
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playa and Cairo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA 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 Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of Playa Hotels i.e., Playa Hotels and Cairo Communication go up and down completely randomly.
Pair Corralation between Playa Hotels and Cairo Communication
Assuming the 90 days horizon Playa Hotels Resorts is expected to generate 2.26 times more return on investment than Cairo Communication. However, Playa Hotels is 2.26 times more volatile than Cairo Communication SpA. It trades about 0.14 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.18 per unit of risk. If you would invest 905.00 in Playa Hotels Resorts on December 22, 2024 and sell it today you would earn a total of 305.00 from holding Playa Hotels Resorts or generate 33.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Playa Hotels Resorts vs. Cairo Communication SpA
Performance |
Timeline |
Playa Hotels Resorts |
Cairo Communication SpA |
Playa Hotels and Cairo Communication Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Playa Hotels and Cairo Communication
The main advantage of trading using opposite Playa Hotels and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.Playa Hotels vs. IMPERIAL TOBACCO | Playa Hotels vs. FUYO GENERAL LEASE | Playa Hotels vs. Zoom Video Communications | Playa Hotels vs. United Rentals |
Cairo Communication vs. PennantPark Investment | Cairo Communication vs. AGNC INVESTMENT | Cairo Communication vs. Yunnan Water Investment | Cairo Communication vs. VIVA WINE GROUP |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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