Correlation Between Mandala Multifinance and Eastparc Hotel

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

By analyzing existing cross correlation between Mandala Multifinance Tbk and Eastparc Hotel Tbk, you can compare the effects of market volatilities on Mandala Multifinance and Eastparc Hotel 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 Mandala Multifinance with a short position of Eastparc Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mandala Multifinance and Eastparc Hotel.

Diversification Opportunities for Mandala Multifinance and Eastparc Hotel

-0.76

Correlation Coefficient

Mandala Multifinance  Eastparc Hotel

Pay attention - limited upside

The 3 months correlation between Mandala and Eastparc is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mandala Multifinance Tbk and Eastparc Hotel Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastparc Hotel Tbk and Mandala Multifinance 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 Mandala Multifinance Tbk are associated (or correlated) with Eastparc Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastparc Hotel Tbk has no effect on the direction of Mandala Multifinance i.e., Mandala Multifinance and Eastparc Hotel go up and down completely randomly.

Pair Corralation between Mandala Multifinance and Eastparc Hotel

Assuming the 90 days trading horizon Mandala Multifinance Tbk is expected to generate 4.15 times more return on investment than Eastparc Hotel. However, Mandala Multifinance is 4.15 times more volatile than Eastparc Hotel Tbk. It trades about 0.21 of its potential returns per unit of risk. Eastparc Hotel Tbk is currently generating about -0.09 per unit of risk. If you would invest  146,316  in Mandala Multifinance Tbk on September 4, 2024 and sell it today you would earn a total of  188,684  from holding Mandala Multifinance Tbk or generate 128.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Mandala Multifinance Tbk  vs.  Eastparc Hotel Tbk

Mandala Multifinance Tbk

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mandala Multifinance Tbk are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mandala Multifinance disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Mandala Multifinance and Eastparc Hotel

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

The idea behind Mandala Multifinance Tbk and Eastparc Hotel Tbk 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.