Correlation Between Park Hotels and INDIKA ENERGY
Can any of the company-specific risk be diversified away by investing in both Park Hotels and INDIKA ENERGY 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 INDIKA ENERGY 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 INDIKA ENERGY, you can compare the effects of market volatilities on Park Hotels and INDIKA ENERGY 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 INDIKA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and INDIKA ENERGY.
Diversification Opportunities for Park Hotels and INDIKA ENERGY
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Park and INDIKA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of Park Hotels i.e., Park Hotels and INDIKA ENERGY go up and down completely randomly.
Pair Corralation between Park Hotels and INDIKA ENERGY
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.68 times more return on investment than INDIKA ENERGY. However, Park Hotels Resorts is 1.47 times less risky than INDIKA ENERGY. It trades about 0.02 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about -0.01 per unit of risk. If you would invest 1,067 in Park Hotels Resorts on November 28, 2024 and sell it today you would earn a total of 103.00 from holding Park Hotels Resorts or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. INDIKA ENERGY
Performance |
| Timeline |
| Park Hotels Resorts |
| INDIKA ENERGY |
Park Hotels and INDIKA ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and INDIKA ENERGY
The main advantage of trading using opposite Park Hotels and INDIKA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, INDIKA ENERGY 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 INDIKA ENERGY will offset losses from the drop in INDIKA ENERGY's long position.| Park Hotels vs. NORTHEAST UTILITIES | Park Hotels vs. Mitsui Chemicals | Park Hotels vs. Easy Software AG | Park Hotels vs. CHEMICAL INDUSTRIES |
| INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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