Correlation Between Playa Hotels and Cimpress

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

Diversification Opportunities for Playa Hotels and Cimpress

-0.55

Correlation Coefficient

Playa Hotels  Cimpress

Excellent diversification

The 3 months correlation between Playa and Cimpress is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Cimpress NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimpress NV 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 Cimpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimpress NV has no effect on the direction of Playa Hotels i.e., Playa Hotels and Cimpress go up and down completely randomly.

Pair Corralation between Playa Hotels and Cimpress

Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 1.57 times more return on investment than Cimpress. However, Playa Hotels is 1.57 times more volatile than Cimpress NV. It trades about 0.16 of its potential returns per unit of risk. Cimpress NV is currently generating about -0.02 per unit of risk. If you would invest  872.00  in Playa Hotels Resorts on October 26, 2024 and sell it today you would earn a total of  364.00  from holding Playa Hotels Resorts or generate 41.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Playa Hotels Resorts  vs.  Cimpress NV

Playa Hotels Resorts

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 12 (%) 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.

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cimpress is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Playa Hotels and Cimpress

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

The idea behind Playa Hotels Resorts and Cimpress NV 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.