Correlation Between Hotel Sahid and Asia Pacific

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

Diversification Opportunities for Hotel Sahid and Asia Pacific

-0.21

Correlation Coefficient

Hotel Sahid  Asia Pacific

Very good diversification

The 3 months correlation between Hotel and Asia is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sahid Jaya and Asia Pacific Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Investama 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 Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Investama has no effect on the direction of Hotel Sahid i.e., Hotel Sahid and Asia Pacific go up and down completely randomly.

Pair Corralation between Hotel Sahid and Asia Pacific

Assuming the 90 days trading horizon Hotel Sahid is expected to generate 2.8 times less return on investment than Asia Pacific. In addition to that, Hotel Sahid is 6.08 times more volatile than Asia Pacific Investama. It trades about 0.0 of its total potential returns per unit of risk. Asia Pacific Investama is currently generating about 0.04 per unit of volatility. If you would invest  3,500  in Asia Pacific Investama on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Asia Pacific Investama or generate 2.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Hotel Sahid Jaya  vs.  Asia Pacific Investama

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 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.

Asia Pacific Investama

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pacific Investama are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Asia Pacific 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 Asia Pacific

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

The idea behind Hotel Sahid Jaya and Asia Pacific Investama 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.