Correlation Between Hotel Sahid and Era Media

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

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

Diversification Opportunities for Hotel Sahid and Era Media

-0.67

Correlation Coefficient

Hotel Sahid  Era Media

Excellent diversification

The 3 months correlation between Hotel and Era is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sahid Jaya and Era Media Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Media Sejahtera and Hotel Sahid 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 Hotel Sahid Jaya are associated (or correlated) with Era Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Media Sejahtera has no effect on the direction of Hotel Sahid i.e., Hotel Sahid and Era Media go up and down completely randomly.

Pair Corralation between Hotel Sahid and Era Media

Assuming the 90 days trading horizon Hotel Sahid Jaya is expected to under-perform the Era Media. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Sahid Jaya is 2.85 times less risky than Era Media. The stock trades about -0.26 of its potential returns per unit of risk. The Era Media Sejahtera is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  5,500  in Era Media Sejahtera on October 25, 2024 and sell it today you would earn a total of  3,700  from holding Era Media Sejahtera or generate 67.27% return on investment over 90 days.

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

Hotel Sahid Jaya  vs.  Era Media Sejahtera

Hotel Sahid Jaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Sahid Jaya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Era Media Sejahtera

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Era Media Sejahtera are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Era Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hotel Sahid and Era Media

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

The idea behind Hotel Sahid Jaya and Era Media Sejahtera 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.