Correlation Between Park Hotels and Hongkong
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Hongkong 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 Hongkong 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 The Hongkong and, you can compare the effects of market volatilities on Park Hotels and Hongkong 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 Hongkong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Hongkong.
Diversification Opportunities for Park Hotels and Hongkong
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Park and Hongkong is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and The Hongkong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hongkong 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 Hongkong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hongkong has no effect on the direction of Park Hotels i.e., Park Hotels and Hongkong go up and down completely randomly.
Pair Corralation between Park Hotels and Hongkong
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.79 times more return on investment than Hongkong. However, Park Hotels Resorts is 1.27 times less risky than Hongkong. It trades about 0.03 of its potential returns per unit of risk. The Hongkong and is currently generating about 0.0 per unit of risk. If you would invest 1,108 in Park Hotels Resorts on October 25, 2024 and sell it today you would earn a total of 192.00 from holding Park Hotels Resorts or generate 17.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Park Hotels Resorts vs. The Hongkong and
Performance |
| Timeline |
| Park Hotels Resorts |
| The Hongkong |
Park Hotels and Hongkong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Hongkong
The main advantage of trading using opposite Park Hotels and Hongkong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Hongkong 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 Hongkong will offset losses from the drop in Hongkong'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 |
| Hongkong vs. Ribbon Communications | Hongkong vs. IMPERIAL TOBACCO | Hongkong vs. Spirent Communications plc | Hongkong vs. Japan Tobacco |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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