Correlation Between Bintang Oto and Hotel Fitra

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

Diversification Opportunities for Bintang Oto and Hotel Fitra

0.67

Correlation Coefficient

Bintang Oto  Hotel Fitra

Poor diversification

The 3 months correlation between Bintang and Hotel is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Oto Global and Hotel Fitra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Fitra International 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 Hotel Fitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Fitra International has no effect on the direction of Bintang Oto i.e., Bintang Oto and Hotel Fitra go up and down completely randomly.

Pair Corralation between Bintang Oto and Hotel Fitra

Assuming the 90 days trading horizon Bintang Oto is expected to generate 3.43 times less return on investment than Hotel Fitra. But when comparing it to its historical volatility, Bintang Oto Global is 1.85 times less risky than Hotel Fitra. It trades about 0.09 of its potential returns per unit of risk. Hotel Fitra International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9,700  in Hotel Fitra International on December 30, 2024 and sell it today you would earn a total of  5,500  from holding Hotel Fitra International or generate 56.7% return on investment over 90 days.

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

Bintang Oto Global  vs.  Hotel Fitra International

Bintang Oto Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bintang Oto Global are ranked lower than 7 (%) 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.

Hotel Fitra International

Risk-Adjusted Performance

Good

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

Pair Trading with Bintang Oto and Hotel Fitra

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

The idea behind Bintang Oto Global and Hotel Fitra International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.