Correlation Between Park Hotels and Perseus Mining

Can any of the company-specific risk be diversified away by investing in both Park Hotels and Perseus Mining 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 Perseus Mining 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 Perseus Mining Limited, you can compare the effects of market volatilities on Park Hotels and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Perseus Mining.

Diversification Opportunities for Park Hotels and Perseus Mining

0.1

Correlation Coefficient

Park Hotels  Perseus Mining

Average diversification

The 3 months correlation between Park and Perseus is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Park Hotels i.e., Park Hotels and Perseus Mining go up and down completely randomly.

Pair Corralation between Park Hotels and Perseus Mining

Assuming the 90 days horizon Park Hotels Resorts is expected to generate 1.04 times more return on investment than Perseus Mining. However, Park Hotels is 1.04 times more volatile than Perseus Mining Limited. It trades about 0.3 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about -0.11 per unit of risk. If you would invest  1,300  in Park Hotels Resorts on September 5, 2024 and sell it today you would earn a total of  210.00  from holding Park Hotels Resorts or generate 16.15% return on investment over 90 days.

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

Park Hotels Resorts  vs.  Perseus Mining Limited

Park Hotels Resorts

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Park Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Perseus Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perseus Mining Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perseus Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Park Hotels and Perseus Mining

The main advantage of trading using opposite Park Hotels and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.

The idea behind Park Hotels Resorts and Perseus Mining Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.