Correlation Between Hotel Sahid and Jakarta Setiabudi

Can any of the company-specific risk be diversified away by investing in both Hotel Sahid and Jakarta Setiabudi 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 Jakarta Setiabudi 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 Jakarta Setiabudi Internasional, you can compare the effects of market volatilities on Hotel Sahid and Jakarta Setiabudi 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 Jakarta Setiabudi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Sahid and Jakarta Setiabudi.

Diversification Opportunities for Hotel Sahid and Jakarta Setiabudi

0.44

Correlation Coefficient

Hotel Sahid  Jakarta Setiabudi

Very weak diversification

The 3 months correlation between Hotel and Jakarta is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sahid Jaya and Jakarta Setiabudi Internasiona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Setiabudi 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 Jakarta Setiabudi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Setiabudi has no effect on the direction of Hotel Sahid i.e., Hotel Sahid and Jakarta Setiabudi go up and down completely randomly.

Pair Corralation between Hotel Sahid and Jakarta Setiabudi

Assuming the 90 days trading horizon Hotel Sahid Jaya is expected to under-perform the Jakarta Setiabudi. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Sahid Jaya is 1.47 times less risky than Jakarta Setiabudi. The stock trades about -0.03 of its potential returns per unit of risk. The Jakarta Setiabudi Internasional is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  972,500  in Jakarta Setiabudi Internasional on December 28, 2024 and sell it today you would lose (265,000) from holding Jakarta Setiabudi Internasional or give up 27.25% of portfolio value over 90 days.

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

Hotel Sahid Jaya  vs.  Jakarta Setiabudi Internasiona

Hotel Sahid Jaya

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Jakarta Setiabudi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jakarta Setiabudi Internasional has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Jakarta Setiabudi 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 Hotel Sahid and Jakarta Setiabudi

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

The idea behind Hotel Sahid Jaya and Jakarta Setiabudi Internasional 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..