Correlation Between Park Hotels and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Hon Hai 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 Park Hotels and Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and Hon Hai Precision, you can compare the effects of market volatilities on Park Hotels and Hon Hai 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 Park Hotels with a short position of Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Hon Hai.
Diversification Opportunities for Park Hotels and Hon Hai
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and Hon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision and Park 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 Park Hotels Resorts are associated (or correlated) with Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Park Hotels i.e., Park Hotels and Hon Hai go up and down completely randomly.
Pair Corralation between Park Hotels and Hon Hai
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.53 times more return on investment than Hon Hai. However, Park Hotels Resorts is 1.9 times less risky than Hon Hai. It trades about -0.07 of its potential returns per unit of risk. Hon Hai Precision is currently generating about -0.08 per unit of risk. If you would invest 1,379 in Park Hotels Resorts on October 26, 2024 and sell it today you would lose (79.00) from holding Park Hotels Resorts or give up 5.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Hon Hai Precision
Performance |
| Timeline |
| Park Hotels Resorts |
| Hon Hai Precision |
Park Hotels and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Hon Hai
The main advantage of trading using opposite Park Hotels and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai's long position.| Park Hotels vs. Phibro Animal Health | Park Hotels vs. ScanSource | Park Hotels vs. SHIP HEALTHCARE HLDGINC | Park Hotels vs. GRIFFIN MINING LTD |
| Hon Hai vs. FRACTAL GAMING GROUP | Hon Hai vs. PARKEN Sport Entertainment | Hon Hai vs. PENN NATL GAMING | Hon Hai vs. SPORT LISBOA E |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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