Correlation Between DATANG INTL and Park Hotels
Can any of the company-specific risk be diversified away by investing in both DATANG INTL and Park 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 DATANG INTL and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATANG INTL POW and Park Hotels Resorts, you can compare the effects of market volatilities on DATANG INTL and Park 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 DATANG INTL with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and Park Hotels.
Diversification Opportunities for DATANG INTL and Park Hotels
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between DATANG and Park is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts and DATANG INTL 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 DATANG INTL POW are associated (or correlated) with Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of DATANG INTL i.e., DATANG INTL and Park Hotels go up and down completely randomly.
Pair Corralation between DATANG INTL and Park Hotels
Assuming the 90 days trading horizon DATANG INTL is expected to generate 6.22 times less return on investment than Park Hotels. In addition to that, DATANG INTL is 1.42 times more volatile than Park Hotels Resorts. It trades about 0.02 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.14 per unit of volatility. If you would invest 1,380 in Park Hotels Resorts on September 12, 2024 and sell it today you would earn a total of 90.00 from holding Park Hotels Resorts or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATANG INTL POW vs. Park Hotels Resorts
Performance |
| Timeline |
| DATANG INTL POW |
| Park Hotels Resorts |
DATANG INTL and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATANG INTL and Park Hotels
The main advantage of trading using opposite DATANG INTL and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATANG INTL position performs unexpectedly, Park 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc |
| Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc | Park Hotels vs. Apple Inc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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