Correlation Between Playa Hotels and Haemonetics

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

Diversification Opportunities for Playa Hotels and Haemonetics

0.21

Correlation Coefficient

Playa Hotels  Haemonetics

Modest diversification

The 3 months correlation between Playa and Haemonetics is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Haemonetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haemonetics 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 Haemonetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haemonetics has no effect on the direction of Playa Hotels i.e., Playa Hotels and Haemonetics go up and down completely randomly.

Pair Corralation between Playa Hotels and Haemonetics

Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 1.18 times more return on investment than Haemonetics. However, Playa Hotels is 1.18 times more volatile than Haemonetics. It trades about 0.06 of its potential returns per unit of risk. Haemonetics is currently generating about -0.01 per unit of risk. If you would invest  696.00  in Playa Hotels Resorts on October 11, 2024 and sell it today you would earn a total of  551.00  from holding Playa Hotels Resorts or generate 79.17% 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.  Haemonetics

Playa Hotels Resorts

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 14 (%) 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.

Haemonetics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haemonetics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Haemonetics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Playa Hotels and Haemonetics

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

The idea behind Playa Hotels Resorts and Haemonetics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.