Correlation Between Hotel Sahid and Mitrabahtera Segara

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

Diversification Opportunities for Hotel Sahid and Mitrabahtera Segara

0.15

Correlation Coefficient

Hotel Sahid  Mitrabahtera Segara

Average diversification

The 3 months correlation between Hotel and Mitrabahtera is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sahid Jaya and Mitrabahtera Segara Sejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitrabahtera Segara 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 Mitrabahtera Segara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitrabahtera Segara has no effect on the direction of Hotel Sahid i.e., Hotel Sahid and Mitrabahtera Segara go up and down completely randomly.

Pair Corralation between Hotel Sahid and Mitrabahtera Segara

Assuming the 90 days trading horizon Hotel Sahid Jaya is expected to under-perform the Mitrabahtera Segara. In addition to that, Hotel Sahid is 1.07 times more volatile than Mitrabahtera Segara Sejati. It trades about -0.05 of its total potential returns per unit of risk. Mitrabahtera Segara Sejati is currently generating about 0.06 per unit of volatility. If you would invest  102,500  in Mitrabahtera Segara Sejati on September 12, 2024 and sell it today you would earn a total of  8,000  from holding Mitrabahtera Segara Sejati or generate 7.8% return on investment over 90 days.

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

Hotel Sahid Jaya  vs.  Mitrabahtera Segara Sejati

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Mitrabahtera Segara

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitrabahtera Segara Sejati are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mitrabahtera Segara may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hotel Sahid and Mitrabahtera Segara

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

The idea behind Hotel Sahid Jaya and Mitrabahtera Segara Sejati 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 Anywhere module to track or share privately all of your investments from the convenience of any device.