Correlation Between Rohm Co and Park Hotels

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

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

Diversification Opportunities for Rohm Co and Park Hotels

-0.49

Correlation Coefficient

Rohm Co  Park Hotels

Very good diversification

The 3 months correlation between Rohm and Park is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Rohm Co 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 Rohm Co 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 Rohm Co 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 Rohm Co i.e., Rohm Co and Park Hotels go up and down completely randomly.

Pair Corralation between Rohm Co and Park Hotels

Assuming the 90 days trading horizon Rohm Co is expected to generate 1.11 times more return on investment than Park Hotels. However, Rohm Co is 1.11 times more volatile than Park Hotels Resorts. It trades about 0.07 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  896.00  in Rohm Co on December 26, 2024 and sell it today you would earn a total of  73.00  from holding Rohm Co or generate 8.15% return on investment over 90 days.

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

Rohm Co  vs.  Park Hotels Resorts

Rohm Co

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rohm Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Rohm Co may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Rohm Co and Park Hotels

The main advantage of trading using opposite Rohm Co and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rohm Co 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 Rohm Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.