Correlation Between PT Hatten and FKS Food

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

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

Diversification Opportunities for PT Hatten and FKS Food

0.03

Correlation Coefficient

PT Hatten  FKS Food

Significant diversification

The 3 months correlation between WINE and FKS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding PT Hatten Bali and FKS Food Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FKS Food Sejahtera and PT Hatten 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 Hatten Bali are associated (or correlated) with FKS Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FKS Food Sejahtera has no effect on the direction of PT Hatten i.e., PT Hatten and FKS Food go up and down completely randomly.

Pair Corralation between PT Hatten and FKS Food

Assuming the 90 days trading horizon PT Hatten Bali is expected to generate 2.94 times more return on investment than FKS Food. However, PT Hatten is 2.94 times more volatile than FKS Food Sejahtera. It trades about 0.15 of its potential returns per unit of risk. FKS Food Sejahtera is currently generating about -0.14 per unit of risk. If you would invest  25,600  in PT Hatten Bali on September 3, 2024 and sell it today you would earn a total of  9,400  from holding PT Hatten Bali or generate 36.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PT Hatten Bali  vs.  FKS Food Sejahtera

PT Hatten Bali

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Hatten Bali are ranked lower than 12 (%) 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.

FKS Food Sejahtera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FKS Food Sejahtera 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.

Pair Trading with PT Hatten and FKS Food

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

The idea behind PT Hatten Bali and FKS Food Sejahtera 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .