Correlation Between Eastparc Hotel and Cipta Selera

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

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

Diversification Opportunities for Eastparc Hotel and Cipta Selera

0.68

Correlation Coefficient

Eastparc Hotel  Cipta Selera

Poor diversification

The 3 months correlation between Eastparc and Cipta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eastparc Hotel Tbk and Cipta Selera Murni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipta Selera Murni and Eastparc Hotel 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 Eastparc Hotel Tbk are associated (or correlated) with Cipta Selera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipta Selera Murni has no effect on the direction of Eastparc Hotel i.e., Eastparc Hotel and Cipta Selera go up and down completely randomly.

Pair Corralation between Eastparc Hotel and Cipta Selera

Assuming the 90 days trading horizon Eastparc Hotel Tbk is expected to generate 0.26 times more return on investment than Cipta Selera. However, Eastparc Hotel Tbk is 3.83 times less risky than Cipta Selera. It trades about -0.1 of its potential returns per unit of risk. Cipta Selera Murni is currently generating about -0.07 per unit of risk. If you would invest  10,800  in Eastparc Hotel Tbk on December 21, 2024 and sell it today you would lose (800.00) from holding Eastparc Hotel Tbk or give up 7.41% of portfolio value over 90 days.

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

Eastparc Hotel Tbk  vs.  Cipta Selera Murni

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Cipta Selera Murni

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cipta Selera Murni has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Eastparc Hotel and Cipta Selera

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

The idea behind Eastparc Hotel Tbk and Cipta Selera Murni 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.