Correlation Between Rejlerkoncernen and Park Hotels

Can any of the company-specific risk be diversified away by investing in both Rejlerkoncernen 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 Rejlerkoncernen and Park Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rejlerkoncernen AB and Park Hotels Resorts, you can compare the effects of market volatilities on Rejlerkoncernen 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 Rejlerkoncernen with a short position of Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rejlerkoncernen and Park Hotels.

Diversification Opportunities for Rejlerkoncernen and Park Hotels

-0.83

Correlation Coefficient

Rejlerkoncernen  Park Hotels

Pay attention - limited upside

The 3 months correlation between Rejlerkoncernen and Park is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Rejlerkoncernen AB 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 Rejlerkoncernen 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 Rejlerkoncernen AB 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 Rejlerkoncernen i.e., Rejlerkoncernen and Park Hotels go up and down completely randomly.

Pair Corralation between Rejlerkoncernen and Park Hotels

Assuming the 90 days horizon Rejlerkoncernen AB is expected to generate 0.79 times more return on investment than Park Hotels. However, Rejlerkoncernen AB is 1.26 times less risky than Park Hotels. It trades about 0.27 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.2 per unit of risk. If you would invest  1,240  in Rejlerkoncernen AB on December 26, 2024 and sell it today you would earn a total of  328.00  from holding Rejlerkoncernen AB or generate 26.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Rejlerkoncernen AB  vs.  Park Hotels Resorts

Rejlerkoncernen AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rejlerkoncernen AB are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Rejlerkoncernen reported solid returns over the last few months and may actually be approaching a breakup point.

Park Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Rejlerkoncernen and Park Hotels

The main advantage of trading using opposite Rejlerkoncernen and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rejlerkoncernen 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.

The idea behind Rejlerkoncernen AB and Park Hotels Resorts 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.