Correlation Between Surya Permata and Hotel Fitra

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

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

Diversification Opportunities for Surya Permata and Hotel Fitra

0.26

Correlation Coefficient

Surya Permata  Hotel Fitra

Modest diversification

The 3 months correlation between Surya and Hotel is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Surya Permata Andalan and Hotel Fitra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Fitra International and Surya Permata 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 Surya Permata Andalan are associated (or correlated) with Hotel Fitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Fitra International has no effect on the direction of Surya Permata i.e., Surya Permata and Hotel Fitra go up and down completely randomly.

Pair Corralation between Surya Permata and Hotel Fitra

Assuming the 90 days trading horizon Surya Permata Andalan is expected to under-perform the Hotel Fitra. But the stock apears to be less risky and, when comparing its historical volatility, Surya Permata Andalan is 2.51 times less risky than Hotel Fitra. The stock trades about -0.01 of its potential returns per unit of risk. The Hotel Fitra International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9,700  in Hotel Fitra International on December 30, 2024 and sell it today you would earn a total of  5,500  from holding Hotel Fitra International or generate 56.7% return on investment over 90 days.

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

Surya Permata Andalan  vs.  Hotel Fitra International

Surya Permata Andalan

Risk-Adjusted Performance

Very Weak

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

Hotel Fitra International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Fitra International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Hotel Fitra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surya Permata and Hotel Fitra

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

The idea behind Surya Permata Andalan and Hotel Fitra International 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.