Correlation Between Playa Hotels and Earthgrains

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

Diversification Opportunities for Playa Hotels and Earthgrains

0.0

Correlation Coefficient

Playa Hotels  Earthgrains

Pay attention - limited upside

The 3 months correlation between Playa and Earthgrains is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Earthgrains Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earthgrains 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 Earthgrains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earthgrains has no effect on the direction of Playa Hotels i.e., Playa Hotels and Earthgrains go up and down completely randomly.

Pair Corralation between Playa Hotels and Earthgrains

If you would invest  848.00  in Playa Hotels Resorts on October 23, 2024 and sell it today you would earn a total of  402.00  from holding Playa Hotels Resorts or generate 47.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Playa Hotels Resorts  vs.  Earthgrains Co

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.

Earthgrains

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Playa Hotels and Earthgrains

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

The idea behind Playa Hotels Resorts and Earthgrains Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.