Correlation Between Hotel Fitra and Planet Properindo

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

Diversification Opportunities for Hotel Fitra and Planet Properindo

-0.34

Correlation Coefficient

Hotel Fitra  Planet Properindo

Very good diversification

The 3 months correlation between Hotel and Planet is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Fitra International and Planet Properindo Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Properindo Jaya 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 Planet Properindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Properindo Jaya has no effect on the direction of Hotel Fitra i.e., Hotel Fitra and Planet Properindo go up and down completely randomly.

Pair Corralation between Hotel Fitra and Planet Properindo

Assuming the 90 days trading horizon Hotel Fitra is expected to generate 1.07 times less return on investment than Planet Properindo. But when comparing it to its historical volatility, Hotel Fitra International is 3.16 times less risky than Planet Properindo. It trades about 0.3 of its potential returns per unit of risk. Planet Properindo Jaya is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,800  in Planet Properindo Jaya on October 26, 2024 and sell it today you would earn a total of  200.00  from holding Planet Properindo Jaya or generate 7.14% return on investment over 90 days.

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

Hotel Fitra International  vs.  Planet Properindo Jaya

Hotel Fitra International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Fitra International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Planet Properindo Jaya

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Properindo Jaya are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Planet Properindo disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hotel Fitra and Planet Properindo

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

The idea behind Hotel Fitra International and Planet Properindo Jaya 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.