Correlation Between Panorama Sentrawisata and Hotel Sahid

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

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

Diversification Opportunities for Panorama Sentrawisata and Hotel Sahid

-0.07

Correlation Coefficient

Panorama Sentrawisata  Hotel Sahid

Good diversification

The 3 months correlation between Panorama and Hotel is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Panorama Sentrawisata Tbk and Hotel Sahid Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Sahid Jaya and Panorama Sentrawisata 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 Panorama Sentrawisata Tbk are associated (or correlated) with Hotel Sahid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Sahid Jaya has no effect on the direction of Panorama Sentrawisata i.e., Panorama Sentrawisata and Hotel Sahid go up and down completely randomly.

Pair Corralation between Panorama Sentrawisata and Hotel Sahid

Assuming the 90 days trading horizon Panorama Sentrawisata is expected to generate 12.18 times less return on investment than Hotel Sahid. But when comparing it to its historical volatility, Panorama Sentrawisata Tbk is 3.92 times less risky than Hotel Sahid. It trades about 0.04 of its potential returns per unit of risk. Hotel Sahid Jaya is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  69,000  in Hotel Sahid Jaya on November 29, 2024 and sell it today you would earn a total of  15,500  from holding Hotel Sahid Jaya or generate 22.46% return on investment over 90 days.

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

Panorama Sentrawisata Tbk  vs.  Hotel Sahid Jaya

Panorama Sentrawisata Tbk

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Panorama Sentrawisata Tbk are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Panorama Sentrawisata disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hotel Sahid Jaya

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hotel Sahid Jaya are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Hotel Sahid is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Panorama Sentrawisata and Hotel Sahid

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

The idea behind Panorama Sentrawisata Tbk and Hotel Sahid 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.