Correlation Between Park Hotels and CITIC

Can any of the company-specific risk be diversified away by investing in both Park Hotels and CITIC 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 CITIC 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 CITIC LTD ADR5, you can compare the effects of market volatilities on Park Hotels and CITIC 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 CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and CITIC.

Diversification Opportunities for Park Hotels and CITIC

-0.24

Correlation Coefficient

Park Hotels  CITIC

Very good diversification

The 3 months correlation between Park and CITIC is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and CITIC LTD ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC LTD ADR5 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 CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC LTD ADR5 has no effect on the direction of Park Hotels i.e., Park Hotels and CITIC go up and down completely randomly.

Pair Corralation between Park Hotels and CITIC

Assuming the 90 days trading horizon Park Hotels Resorts is expected to under-perform the CITIC. In addition to that, Park Hotels is 1.14 times more volatile than CITIC LTD ADR5. It trades about -0.17 of its total potential returns per unit of risk. CITIC LTD ADR5 is currently generating about -0.08 per unit of volatility. If you would invest  520.00  in CITIC LTD ADR5 on October 10, 2024 and sell it today you would lose (15.00) from holding CITIC LTD ADR5 or give up 2.88% of portfolio value over 90 days.

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

Park Hotels Resorts  vs.  CITIC LTD ADR5

Park Hotels Resorts

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CITIC LTD ADR5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC LTD ADR5 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CITIC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Park Hotels and CITIC

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

The idea behind Park Hotels Resorts and CITIC LTD ADR5 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.