Correlation Between Hotel Sahid and Pudjiadi Prestige

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

Diversification Opportunities for Hotel Sahid and Pudjiadi Prestige

-0.07

Correlation Coefficient

Hotel Sahid  Pudjiadi Prestige

Good diversification

The 3 months correlation between Hotel and Pudjiadi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sahid Jaya and Pudjiadi Prestige Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pudjiadi Prestige Tbk 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 Pudjiadi Prestige. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pudjiadi Prestige Tbk has no effect on the direction of Hotel Sahid i.e., Hotel Sahid and Pudjiadi Prestige go up and down completely randomly.

Pair Corralation between Hotel Sahid and Pudjiadi Prestige

Assuming the 90 days trading horizon Hotel Sahid Jaya is expected to under-perform the Pudjiadi Prestige. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Sahid Jaya is 2.42 times less risky than Pudjiadi Prestige. The stock trades about -0.04 of its potential returns per unit of risk. The Pudjiadi Prestige Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  27,200  in Pudjiadi Prestige Tbk on September 4, 2024 and sell it today you would earn a total of  3,400  from holding Pudjiadi Prestige Tbk or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hotel Sahid Jaya  vs.  Pudjiadi Prestige Tbk

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.

Pudjiadi Prestige Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pudjiadi Prestige Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pudjiadi Prestige disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hotel Sahid and Pudjiadi Prestige

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

The idea behind Hotel Sahid Jaya and Pudjiadi Prestige Tbk 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.