Correlation Between RCI Hospitality and PT Astra

Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and PT Astra 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 RCI Hospitality and PT Astra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RCI Hospitality Holdings and PT Astra International, you can compare the effects of market volatilities on RCI Hospitality and PT Astra 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 RCI Hospitality with a short position of PT Astra. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and PT Astra.

Diversification Opportunities for RCI Hospitality and PT Astra

0.08

Correlation Coefficient

RCI Hospitality  PT Astra

Significant diversification

The 3 months correlation between RCI and ASJA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and PT Astra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Astra International and RCI Hospitality 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 RCI Hospitality Holdings are associated (or correlated) with PT Astra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Astra International has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and PT Astra go up and down completely randomly.

Pair Corralation between RCI Hospitality and PT Astra

Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 0.46 times more return on investment than PT Astra. However, RCI Hospitality Holdings is 2.18 times less risky than PT Astra. It trades about 0.29 of its potential returns per unit of risk. PT Astra International is currently generating about 0.1 per unit of risk. If you would invest  4,813  in RCI Hospitality Holdings on October 8, 2024 and sell it today you would earn a total of  637.00  from holding RCI Hospitality Holdings or generate 13.23% return on investment over 90 days.

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

RCI Hospitality Holdings  vs.  PT Astra International

RCI Hospitality Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, RCI Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

PT Astra International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, PT Astra may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with RCI Hospitality and PT Astra

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

The idea behind RCI Hospitality Holdings and PT Astra 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.