Correlation Between PT Boston and PT Hatten

Can any of the company-specific risk be diversified away by investing in both PT Boston and PT Hatten 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 PT Boston and PT Hatten into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Boston Furniture and PT Hatten Bali, you can compare the effects of market volatilities on PT Boston and PT Hatten 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 PT Boston with a short position of PT Hatten. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Boston and PT Hatten.

Diversification Opportunities for PT Boston and PT Hatten

0.12

Correlation Coefficient

PT Boston  PT Hatten

Average diversification

The 3 months correlation between SOFA and WINE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PT Boston Furniture and PT Hatten Bali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hatten Bali and PT Boston 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 PT Boston Furniture are associated (or correlated) with PT Hatten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hatten Bali has no effect on the direction of PT Boston i.e., PT Boston and PT Hatten go up and down completely randomly.

Pair Corralation between PT Boston and PT Hatten

Assuming the 90 days trading horizon PT Boston Furniture is expected to generate 1.02 times more return on investment than PT Hatten. However, PT Boston is 1.02 times more volatile than PT Hatten Bali. It trades about 0.3 of its potential returns per unit of risk. PT Hatten Bali is currently generating about 0.14 per unit of risk. If you would invest  1,900  in PT Boston Furniture on September 4, 2024 and sell it today you would earn a total of  1,800  from holding PT Boston Furniture or generate 94.74% return on investment over 90 days.

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

PT Boston Furniture  vs.  PT Hatten Bali

PT Boston Furniture

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PT Boston Furniture are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Boston disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Hatten Bali

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Hatten Bali are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Hatten disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Boston and PT Hatten

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

The idea behind PT Boston Furniture and PT Hatten Bali 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 Commodity Directory module to find actively traded commodities issued by global exchanges.