Correlation Between Park Hotels and Playstudios

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

Diversification Opportunities for Park Hotels and Playstudios

0.8

Correlation Coefficient

Park Hotels  Playstudios

Very poor diversification

The 3 months correlation between Park and Playstudios is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios 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 Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of Park Hotels i.e., Park Hotels and Playstudios go up and down completely randomly.

Pair Corralation between Park Hotels and Playstudios

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 0.61 times more return on investment than Playstudios. However, Park Hotels Resorts is 1.63 times less risky than Playstudios. It trades about 0.05 of its potential returns per unit of risk. Playstudios is currently generating about -0.02 per unit of risk. If you would invest  975.00  in Park Hotels Resorts on September 20, 2024 and sell it today you would earn a total of  476.00  from holding Park Hotels Resorts or generate 48.82% return on investment over 90 days.

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

Park Hotels Resorts  vs.  Playstudios

Park Hotels Resorts

Risk-Adjusted Performance

0 of 100

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 quite persistent forward-looking signals, Park Hotels is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Playstudios

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Hotels and Playstudios

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

The idea behind Park Hotels Resorts and Playstudios 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..