Correlation Between HYATT HOTELS and Telkom Indonesia

Can any of the company-specific risk be diversified away by investing in both HYATT HOTELS and Telkom Indonesia 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 HYATT HOTELS and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HYATT HOTELS A and Telkom Indonesia Tbk, you can compare the effects of market volatilities on HYATT HOTELS and Telkom Indonesia 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 HYATT HOTELS with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYATT HOTELS and Telkom Indonesia.

Diversification Opportunities for HYATT HOTELS and Telkom Indonesia

-0.54

Correlation Coefficient

HYATT HOTELS  Telkom Indonesia

Excellent diversification

The 3 months correlation between HYATT and Telkom is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding HYATT HOTELS A and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and HYATT 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 HYATT HOTELS A are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of HYATT HOTELS i.e., HYATT HOTELS and Telkom Indonesia go up and down completely randomly.

Pair Corralation between HYATT HOTELS and Telkom Indonesia

Assuming the 90 days trading horizon HYATT HOTELS is expected to generate 99.02 times less return on investment than Telkom Indonesia. But when comparing it to its historical volatility, HYATT HOTELS A is 6.29 times less risky than Telkom Indonesia. It trades about 0.0 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Telkom Indonesia Tbk on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Telkom Indonesia Tbk or generate 0.0% return on investment over 90 days.

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

HYATT HOTELS A  vs.  Telkom Indonesia Tbk

HYATT HOTELS A

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days HYATT HOTELS A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, HYATT HOTELS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Telkom Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Telkom Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain forward indicators, Telkom Indonesia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HYATT HOTELS and Telkom Indonesia

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

The idea behind HYATT HOTELS A and Telkom Indonesia Tbk 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.