Correlation Between Mitsui Chemicals and Park Hotels

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

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

Diversification Opportunities for Mitsui Chemicals and Park Hotels

-0.71

Correlation Coefficient

Mitsui Chemicals  Park Hotels

Pay attention - limited upside

The 3 months correlation between Mitsui and Park is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals i.e., Mitsui Chemicals and Park Hotels go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Park Hotels

Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.48 times more return on investment than Park Hotels. However, Mitsui Chemicals is 2.1 times less risky than Park Hotels. It trades about 0.09 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.24 per unit of risk. If you would invest  2,076  in Mitsui Chemicals on December 29, 2024 and sell it today you would earn a total of  44.00  from holding Mitsui Chemicals or generate 2.12% return on investment over 90 days.

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

Mitsui Chemicals  vs.  Park Hotels Resorts

Mitsui Chemicals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Chemicals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Mitsui Chemicals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 unsteady 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 Mitsui Chemicals and Park Hotels

The main advantage of trading using opposite Mitsui Chemicals and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals 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 Mitsui Chemicals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.