Correlation Between Hotel Fitra and Bintang Oto

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

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

Diversification Opportunities for Hotel Fitra and Bintang Oto

0.52

Correlation Coefficient

Hotel Fitra  Bintang Oto

Very weak diversification

The 3 months correlation between Hotel and Bintang is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Fitra International and Bintang Oto Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Oto Global and Hotel Fitra 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 Hotel Fitra International are associated (or correlated) with Bintang Oto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Oto Global has no effect on the direction of Hotel Fitra i.e., Hotel Fitra and Bintang Oto go up and down completely randomly.

Pair Corralation between Hotel Fitra and Bintang Oto

Assuming the 90 days trading horizon Hotel Fitra International is expected to under-perform the Bintang Oto. In addition to that, Hotel Fitra is 1.42 times more volatile than Bintang Oto Global. It trades about -0.1 of its total potential returns per unit of risk. Bintang Oto Global is currently generating about -0.09 per unit of volatility. If you would invest  128,000  in Bintang Oto Global on September 4, 2024 and sell it today you would lose (75,000) from holding Bintang Oto Global or give up 58.59% of portfolio value over 90 days.

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

Hotel Fitra International  vs.  Bintang Oto Global

Hotel Fitra International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bintang Oto Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bintang Oto Global 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Hotel Fitra and Bintang Oto

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

The idea behind Hotel Fitra International and Bintang Oto Global 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.