Correlation Between Kinnevik Investment and Park Hotels

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

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

Diversification Opportunities for Kinnevik Investment and Park Hotels

-0.04

Correlation Coefficient

Kinnevik Investment  Park Hotels

Good diversification

The 3 months correlation between Kinnevik and Park is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB 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 Kinnevik Investment 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 Kinnevik Investment AB 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 Kinnevik Investment i.e., Kinnevik Investment and Park Hotels go up and down completely randomly.

Pair Corralation between Kinnevik Investment and Park Hotels

Assuming the 90 days trading horizon Kinnevik Investment AB is expected to under-perform the Park Hotels. In addition to that, Kinnevik Investment is 1.17 times more volatile than Park Hotels Resorts. It trades about -0.09 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.06 per unit of volatility. If you would invest  1,419  in Park Hotels Resorts on September 28, 2024 and sell it today you would earn a total of  80.00  from holding Park Hotels Resorts or generate 5.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Kinnevik Investment AB  vs.  Park Hotels Resorts

Kinnevik Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinnevik Investment AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Park Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kinnevik Investment and Park Hotels

The main advantage of trading using opposite Kinnevik Investment and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment 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 Kinnevik Investment AB 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.