Correlation Between SBC Medical and Park Hotels

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

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

Diversification Opportunities for SBC Medical and Park Hotels

0.28

Correlation Coefficient

SBC Medical  Park Hotels

Modest diversification

The 3 months correlation between SBC and Park is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SBC Medical Group 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 SBC Medical 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 SBC Medical Group 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 SBC Medical i.e., SBC Medical and Park Hotels go up and down completely randomly.

Pair Corralation between SBC Medical and Park Hotels

Assuming the 90 days horizon SBC Medical Group is expected to generate 3.1 times more return on investment than Park Hotels. However, SBC Medical is 3.1 times more volatile than Park Hotels Resorts. It trades about 0.09 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.02 per unit of risk. If you would invest  25.00  in SBC Medical Group on September 23, 2024 and sell it today you would earn a total of  2.00  from holding SBC Medical Group or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

SBC Medical Group  vs.  Park Hotels Resorts

SBC Medical Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBC Medical Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, SBC Medical showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SBC Medical and Park Hotels

The main advantage of trading using opposite SBC Medical and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBC Medical 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 SBC Medical Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.