Correlation Between Park Hotels and Peel Mining

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

Diversification Opportunities for Park Hotels and Peel Mining

0.4

Correlation Coefficient

Park Hotels  Peel Mining

Very weak diversification

The 3 months correlation between Park and Peel is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Peel Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining Limited 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining Limited has no effect on the direction of Park Hotels i.e., Park Hotels and Peel Mining go up and down completely randomly.

Pair Corralation between Park Hotels and Peel Mining

Assuming the 90 days trading horizon Park Hotels is expected to generate 2.4 times less return on investment than Peel Mining. But when comparing it to its historical volatility, Park Hotels Resorts is 3.23 times less risky than Peel Mining. It trades about 0.02 of its potential returns per unit of risk. Peel Mining Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8.35  in Peel Mining Limited on September 13, 2024 and sell it today you would lose (1.30) from holding Peel Mining Limited or give up 15.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.34%
Values	Daily Returns

Park Hotels Resorts  vs.  Peel Mining Limited

Park Hotels Resorts

Risk-Adjusted Performance

11 of 100

Good

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

Peel Mining Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Peel Mining Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peel Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Hotels and Peel Mining

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

The idea behind Park Hotels Resorts and Peel Mining Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.