Correlation Between Eastparc Hotel and PT Dafam

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

Diversification Opportunities for Eastparc Hotel and PT Dafam

0.31

Correlation Coefficient

Eastparc Hotel  PT Dafam

Weak diversification

The 3 months correlation between Eastparc and DFAM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eastparc Hotel Tbk and PT Dafam Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Dafam Property 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 PT Dafam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Dafam Property has no effect on the direction of Eastparc Hotel i.e., Eastparc Hotel and PT Dafam go up and down completely randomly.

Pair Corralation between Eastparc Hotel and PT Dafam

Assuming the 90 days trading horizon Eastparc Hotel Tbk is expected to generate 0.8 times more return on investment than PT Dafam. However, Eastparc Hotel Tbk is 1.24 times less risky than PT Dafam. It trades about 0.03 of its potential returns per unit of risk. PT Dafam Property is currently generating about -0.04 per unit of risk. If you would invest  8,431  in Eastparc Hotel Tbk on September 4, 2024 and sell it today you would earn a total of  2,169  from holding Eastparc Hotel Tbk or generate 25.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Eastparc Hotel Tbk  vs.  PT Dafam Property

Eastparc Hotel Tbk

Risk-Adjusted Performance

0 of 100

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.

PT Dafam Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Dafam Property has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Dafam 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 Eastparc Hotel and PT Dafam

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

The idea behind Eastparc Hotel Tbk and PT Dafam Property 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.