Correlation Between ZipLink and Playa Hotels

Can any of the company-specific risk be diversified away by investing in both ZipLink and Playa Hotels 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 ZipLink and Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZipLink and Playa Hotels Resorts, you can compare the effects of market volatilities on ZipLink and Playa Hotels 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 ZipLink with a short position of Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZipLink and Playa Hotels.

Diversification Opportunities for ZipLink and Playa Hotels

0.0

Correlation Coefficient

ZipLink  Playa Hotels

Pay attention - limited upside

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

Pair Corralation between ZipLink and Playa Hotels

If you would invest  1,226  in Playa Hotels Resorts on December 26, 2024 and sell it today you would earn a total of  108.00  from holding Playa Hotels Resorts or generate 8.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ZipLink  vs.  Playa Hotels Resorts

ZipLink

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZipLink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ZipLink is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Playa Hotels Resorts

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Playa Hotels may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ZipLink and Playa Hotels

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

The idea behind ZipLink and Playa Hotels Resorts 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.