Correlation Between Park Hotels and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Park Hotels and Telkom Indonesia 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 Park Hotels and Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and Telkom Indonesia Tbk, you can compare the effects of market volatilities on Park Hotels and Telkom Indonesia 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 Park Hotels with a short position of Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Telkom Indonesia.
Diversification Opportunities for Park Hotels and Telkom Indonesia
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and Telkom is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk and Park Hotels 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 Park Hotels Resorts are associated (or correlated) with Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Park Hotels i.e., Park Hotels and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Park Hotels and Telkom Indonesia
Assuming the 90 days trading horizon Park Hotels Resorts is expected to generate 0.21 times more return on investment than Telkom Indonesia. However, Park Hotels Resorts is 4.86 times less risky than Telkom Indonesia. It trades about -0.05 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.05 per unit of risk. If you would invest 1,341 in Park Hotels Resorts on October 22, 2024 and sell it today you would lose (21.00) from holding Park Hotels Resorts or give up 1.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Park Hotels Resorts vs. Telkom Indonesia Tbk
Performance |
Timeline |
Park Hotels Resorts |
Telkom Indonesia Tbk |
Park Hotels and Telkom Indonesia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Park Hotels and Telkom Indonesia
The main advantage of trading using opposite Park Hotels and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels position performs unexpectedly, Telkom Indonesia 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 Telkom Indonesia will offset losses from the drop in Telkom Indonesia's long position.Park Hotels vs. Cal Maine Foods | Park Hotels vs. Corporate Office Properties | Park Hotels vs. Molson Coors Beverage | Park Hotels vs. TYSON FOODS A |
Telkom Indonesia vs. Lendlease Group | Telkom Indonesia vs. CarsalesCom | Telkom Indonesia vs. Grand Canyon Education | Telkom Indonesia vs. American Public Education |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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