Correlation Between Playa Hotels and Aldel Financial

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

Diversification Opportunities for Playa Hotels and Aldel Financial

-0.03

Correlation Coefficient

Playa Hotels  Aldel Financial

Good diversification

The 3 months correlation between Playa and Aldel is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Aldel Financial II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldel Financial II 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 Aldel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldel Financial II has no effect on the direction of Playa Hotels i.e., Playa Hotels and Aldel Financial go up and down completely randomly.

Pair Corralation between Playa Hotels and Aldel Financial

Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 16.13 times more return on investment than Aldel Financial. However, Playa Hotels is 16.13 times more volatile than Aldel Financial II. It trades about 0.05 of its potential returns per unit of risk. Aldel Financial II is currently generating about 0.1 per unit of risk. If you would invest  925.00  in Playa Hotels Resorts on October 3, 2024 and sell it today you would earn a total of  340.00  from holding Playa Hotels Resorts or generate 36.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	12.5%
Values	Daily Returns

Playa Hotels Resorts  vs.  Aldel Financial II

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

Aldel Financial II

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Playa Hotels and Aldel Financial

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

The idea behind Playa Hotels Resorts and Aldel Financial II 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..