Correlation Between Eastparc Hotel and Menteng Heritage

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

Diversification Opportunities for Eastparc Hotel and Menteng Heritage

-0.47

Correlation Coefficient

Eastparc Hotel  Menteng Heritage

Very good diversification

The 3 months correlation between Eastparc and Menteng is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eastparc Hotel Tbk and Menteng Heritage Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menteng Heritage Realty 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 Menteng Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menteng Heritage Realty has no effect on the direction of Eastparc Hotel i.e., Eastparc Hotel and Menteng Heritage go up and down completely randomly.

Pair Corralation between Eastparc Hotel and Menteng Heritage

Assuming the 90 days trading horizon Eastparc Hotel Tbk is expected to under-perform the Menteng Heritage. But the stock apears to be less risky and, when comparing its historical volatility, Eastparc Hotel Tbk is 2.09 times less risky than Menteng Heritage. The stock trades about -0.11 of its potential returns per unit of risk. The Menteng Heritage Realty is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,500  in Menteng Heritage Realty on September 1, 2024 and sell it today you would earn a total of  1,100  from holding Menteng Heritage Realty or generate 31.43% return on investment over 90 days.

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

Eastparc Hotel Tbk  vs.  Menteng Heritage Realty

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Menteng Heritage Realty

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Menteng Heritage Realty are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Menteng Heritage disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastparc Hotel and Menteng Heritage

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

The idea behind Eastparc Hotel Tbk and Menteng Heritage Realty 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.