Correlation Between TRAVEL + and PT Hexindo

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and PT Hexindo Adiperkasa, you can compare the effects of market volatilities on TRAVEL + and PT Hexindo 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 TRAVEL + with a short position of PT Hexindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and PT Hexindo.

Diversification Opportunities for TRAVEL + and PT Hexindo

-0.77

Correlation Coefficient

TRAVEL +  PT Hexindo

Pay attention - limited upside

The 3 months correlation between TRAVEL and HX1A is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and PT Hexindo Adiperkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hexindo Adiperkasa and TRAVEL + 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 TRAVEL LEISURE DL 01 are associated (or correlated) with PT Hexindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hexindo Adiperkasa has no effect on the direction of TRAVEL + i.e., TRAVEL + and PT Hexindo go up and down completely randomly.

Pair Corralation between TRAVEL + and PT Hexindo

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.5 times more return on investment than PT Hexindo. However, TRAVEL LEISURE DL 01 is 1.99 times less risky than PT Hexindo. It trades about 0.05 of its potential returns per unit of risk. PT Hexindo Adiperkasa is currently generating about 0.02 per unit of risk. If you would invest  3,505  in TRAVEL LEISURE DL 01 on October 23, 2024 and sell it today you would earn a total of  1,545  from holding TRAVEL LEISURE DL 01 or generate 44.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

TRAVEL LEISURE DL 01  vs.  PT Hexindo Adiperkasa

TRAVEL LEISURE DL

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

PT Hexindo Adiperkasa

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Hexindo Adiperkasa are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PT Hexindo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TRAVEL + and PT Hexindo

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

The idea behind TRAVEL LEISURE DL 01 and PT Hexindo Adiperkasa 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 Stocks Directory module to find actively traded stocks across global markets.