Correlation Between Summit Hotel and PARK24 SPONS

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Can any of the company-specific risk be diversified away by investing in both Summit Hotel and PARK24 SPONS 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 Summit Hotel and PARK24 SPONS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Hotel Properties and PARK24 SPONS ADR1, you can compare the effects of market volatilities on Summit Hotel and PARK24 SPONS 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 Summit Hotel with a short position of PARK24 SPONS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Hotel and PARK24 SPONS.

Diversification Opportunities for Summit Hotel and PARK24 SPONS

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Summit and PARK24 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Summit Hotel Properties and PARK24 SPONS ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARK24 SPONS ADR1 and Summit Hotel 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 Summit Hotel Properties are associated (or correlated) with PARK24 SPONS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARK24 SPONS ADR1 has no effect on the direction of Summit Hotel i.e., Summit Hotel and PARK24 SPONS go up and down completely randomly.

Pair Corralation between Summit Hotel and PARK24 SPONS

Assuming the 90 days horizon Summit Hotel is expected to generate 1.39 times less return on investment than PARK24 SPONS. But when comparing it to its historical volatility, Summit Hotel Properties is 1.31 times less risky than PARK24 SPONS. It trades about 0.06 of its potential returns per unit of risk. PARK24 SPONS ADR1 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  875.00  in PARK24 SPONS ADR1 on September 3, 2024 and sell it today you would earn a total of  165.00  from holding PARK24 SPONS ADR1 or generate 18.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Summit Hotel Properties  vs.  PARK24 SPONS ADR1

 Performance 
       Timeline  
Summit Hotel Properties 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Summit Hotel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
PARK24 SPONS ADR1 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PARK24 SPONS ADR1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PARK24 SPONS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Summit Hotel and PARK24 SPONS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Summit Hotel and PARK24 SPONS

The main advantage of trading using opposite Summit Hotel and PARK24 SPONS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Hotel position performs unexpectedly, PARK24 SPONS 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 PARK24 SPONS will offset losses from the drop in PARK24 SPONS's long position.
The idea behind Summit Hotel Properties and PARK24 SPONS ADR1 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 CEOs Directory module to screen CEOs from public companies around the world.

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