Correlation Between Park Hotels and Distoken Acquisition

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

Diversification Opportunities for Park Hotels and Distoken Acquisition

-0.06

Correlation Coefficient

Park Hotels  Distoken Acquisition

Good diversification

The 3 months correlation between Park and Distoken is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition 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 Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Park Hotels i.e., Park Hotels and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Park Hotels and Distoken Acquisition

Allowing for the 90-day total investment horizon Park Hotels is expected to generate 13.8 times less return on investment than Distoken Acquisition. But when comparing it to its historical volatility, Park Hotels Resorts is 20.94 times less risky than Distoken Acquisition. It trades about 0.07 of its potential returns per unit of risk. Distoken Acquisition is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Distoken Acquisition on September 3, 2024 and sell it today you would lose (1.70) from holding Distoken Acquisition or give up 48.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.25%
Values	Daily Returns

Park Hotels Resorts  vs.  Distoken Acquisition

Park Hotels Resorts

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Distoken Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain basic indicators, Distoken Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Hotels and Distoken Acquisition

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

The idea behind Park Hotels Resorts and Distoken Acquisition 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.