Correlation Between Playa Hotels and Valneva SE

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

Diversification Opportunities for Playa Hotels and Valneva SE

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Playa and Valneva is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Playa Hotels i.e., Playa Hotels and Valneva SE go up and down completely randomly.

Pair Corralation between Playa Hotels and Valneva SE

Given the investment horizon of 90 days Playa Hotels Resorts is expected to generate 0.68 times more return on investment than Valneva SE. However, Playa Hotels Resorts is 1.47 times less risky than Valneva SE. It trades about 0.22 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.36 per unit of risk. If you would invest  769.00  in Playa Hotels Resorts on August 31, 2024 and sell it today you would earn a total of  200.00  from holding Playa Hotels Resorts or generate 26.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Playa Hotels Resorts  vs.  Valneva SE ADR

 Performance 
       Timeline  
Playa Hotels Resorts 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 17 (%) 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.
Valneva SE ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Playa Hotels and Valneva SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Playa Hotels and Valneva SE

The main advantage of trading using opposite Playa Hotels and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.
The idea behind Playa Hotels Resorts and Valneva SE ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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