Correlation Between PT Bank and Park Hotels

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

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

Diversification Opportunities for PT Bank and Park Hotels

-0.47

Correlation Coefficient

PT Bank  Park Hotels

Very good diversification

The 3 months correlation between BOZA and Park is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank 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 PT Bank 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 PT Bank Maybank 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 PT Bank i.e., PT Bank and Park Hotels go up and down completely randomly.

Pair Corralation between PT Bank and Park Hotels

Assuming the 90 days trading horizon PT Bank is expected to generate 13.26 times less return on investment than Park Hotels. In addition to that, PT Bank is 2.13 times more volatile than Park Hotels Resorts. It trades about 0.01 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.17 per unit of volatility. If you would invest  1,217  in Park Hotels Resorts on September 12, 2024 and sell it today you would earn a total of  263.00  from holding Park Hotels Resorts or generate 21.61% return on investment over 90 days.

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

PT Bank Maybank  vs.  Park Hotels Resorts

PT Bank Maybank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Maybank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Park Hotels Resorts

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Park Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Park Hotels

The main advantage of trading using opposite PT Bank and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Maybank 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.