Correlation Between Pacific Strategic and PT Hatten

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

By analyzing existing cross correlation between Pacific Strategic Financial and PT Hatten Bali, you can compare the effects of market volatilities on Pacific Strategic and PT Hatten 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 Pacific Strategic with a short position of PT Hatten. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Strategic and PT Hatten.

Diversification Opportunities for Pacific Strategic and PT Hatten

0.05

Correlation Coefficient

Pacific Strategic  PT Hatten

Significant diversification

The 3 months correlation between Pacific and WINE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Strategic Financial and PT Hatten Bali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hatten Bali and Pacific Strategic 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 Pacific Strategic Financial are associated (or correlated) with PT Hatten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hatten Bali has no effect on the direction of Pacific Strategic i.e., Pacific Strategic and PT Hatten go up and down completely randomly.

Pair Corralation between Pacific Strategic and PT Hatten

Assuming the 90 days trading horizon Pacific Strategic Financial is expected to under-perform the PT Hatten. But the stock apears to be less risky and, when comparing its historical volatility, Pacific Strategic Financial is 2.52 times less risky than PT Hatten. The stock trades about -0.04 of its potential returns per unit of risk. The PT Hatten Bali is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  25,600  in PT Hatten Bali on September 3, 2024 and sell it today you would earn a total of  9,400  from holding PT Hatten Bali or generate 36.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pacific Strategic Financial  vs.  PT Hatten Bali

Pacific Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Strategic Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pacific Strategic is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Hatten Bali

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Hatten Bali are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Hatten disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacific Strategic and PT Hatten

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

The idea behind Pacific Strategic Financial and PT Hatten Bali 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.