Correlation Between Hotel Sahid and Ristia Bintang

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

Diversification Opportunities for Hotel Sahid and Ristia Bintang

-0.41

Correlation Coefficient

Hotel Sahid  Ristia Bintang

Very good diversification

The 3 months correlation between Hotel and Ristia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sahid Jaya and Ristia Bintang Mahkotasejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ristia Bintang Mahko 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 Ristia Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ristia Bintang Mahko has no effect on the direction of Hotel Sahid i.e., Hotel Sahid and Ristia Bintang go up and down completely randomly.

Pair Corralation between Hotel Sahid and Ristia Bintang

Assuming the 90 days trading horizon Hotel Sahid is expected to generate 2.91 times less return on investment than Ristia Bintang. In addition to that, Hotel Sahid is 1.1 times more volatile than Ristia Bintang Mahkotasejati. It trades about 0.0 of its total potential returns per unit of risk. Ristia Bintang Mahkotasejati is currently generating about 0.01 per unit of volatility. If you would invest  2,900  in Ristia Bintang Mahkotasejati on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Ristia Bintang Mahkotasejati or generate 0.0% return on investment over 90 days.

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

Hotel Sahid Jaya  vs.  Ristia Bintang Mahkotasejati

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 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.

Ristia Bintang Mahko

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ristia Bintang Mahkotasejati are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Ristia Bintang 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 Ristia Bintang

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

The idea behind Hotel Sahid Jaya and Ristia Bintang Mahkotasejati 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.