Correlation Between Playa Hotels and Craft Brew

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

Diversification Opportunities for Playa Hotels and Craft Brew

0.0

Correlation Coefficient

Playa Hotels  Craft Brew

Pay attention - limited upside

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

Pair Corralation between Playa Hotels and Craft Brew

If you would invest  0.00  in Craft Brew Alliance on January 30, 2024 and sell it today you would earn a total of  0.00  from holding Craft Brew Alliance or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Playa Hotels Resorts  vs.  Craft Brew Alliance

Playa Hotels Resorts

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playa Hotels Resorts are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Playa Hotels may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Craft Brew Alliance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Craft Brew Alliance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Craft Brew is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Playa Hotels and Craft Brew

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

The idea behind Playa Hotels Resorts and Craft Brew Alliance 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.