Correlation Between Estee Lauder and Park Ha

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

By analyzing existing cross correlation between Estee Lauder Companies and Park Ha Biological, you can compare the effects of market volatilities on Estee Lauder and Park Ha 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 Estee Lauder with a short position of Park Ha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Park Ha.

Diversification Opportunities for Estee Lauder and Park Ha

-0.6

Correlation Coefficient

Estee Lauder  Park Ha

Excellent diversification

The 3 months correlation between Estee and Park is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Park Ha Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Ha Biological and Estee Lauder 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 Estee Lauder Companies are associated (or correlated) with Park Ha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Ha Biological has no effect on the direction of Estee Lauder i.e., Estee Lauder and Park Ha go up and down completely randomly.

Pair Corralation between Estee Lauder and Park Ha

Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Park Ha. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 2.41 times less risky than Park Ha. The stock trades about -0.12 of its potential returns per unit of risk. The Park Ha Biological is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  502.00  in Park Ha Biological on January 7, 2025 and sell it today you would earn a total of  857.00  from holding Park Ha Biological or generate 170.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Estee Lauder Companies  vs.  Park Ha Biological

Estee Lauder Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Estee Lauder Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Park Ha Biological

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Park Ha Biological are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Park Ha demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Estee Lauder and Park Ha

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

The idea behind Estee Lauder Companies and Park Ha Biological 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.