Correlation Between Bintang Oto and Eastparc Hotel

Can any of the company-specific risk be diversified away by investing in both Bintang Oto and Eastparc Hotel 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 Bintang Oto and Eastparc Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bintang Oto Global and Eastparc Hotel Tbk, you can compare the effects of market volatilities on Bintang Oto and Eastparc Hotel 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 Bintang Oto with a short position of Eastparc Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bintang Oto and Eastparc Hotel.

Diversification Opportunities for Bintang Oto and Eastparc Hotel

-0.48

Correlation Coefficient

Bintang Oto  Eastparc Hotel

Very good diversification

The 3 months correlation between Bintang and Eastparc is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Oto Global and Eastparc Hotel Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastparc Hotel Tbk and Bintang Oto 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 Bintang Oto Global are associated (or correlated) with Eastparc Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastparc Hotel Tbk has no effect on the direction of Bintang Oto i.e., Bintang Oto and Eastparc Hotel go up and down completely randomly.

Pair Corralation between Bintang Oto and Eastparc Hotel

Assuming the 90 days trading horizon Bintang Oto Global is expected to generate 1.63 times more return on investment than Eastparc Hotel. However, Bintang Oto is 1.63 times more volatile than Eastparc Hotel Tbk. It trades about 0.28 of its potential returns per unit of risk. Eastparc Hotel Tbk is currently generating about -0.4 per unit of risk. If you would invest  58,500  in Bintang Oto Global on December 2, 2024 and sell it today you would earn a total of  9,500  from holding Bintang Oto Global or generate 16.24% return on investment over 90 days.

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

Bintang Oto Global  vs.  Eastparc Hotel Tbk

Bintang Oto Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bintang Oto Global are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bintang Oto disclosed solid returns over the last few months and may actually be approaching a breakup point.

Eastparc Hotel Tbk

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bintang Oto and Eastparc Hotel

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

The idea behind Bintang Oto Global and Eastparc Hotel 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.