Correlation Between Digital Mediatama and Hotel Fitra

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

By analyzing existing cross correlation between Digital Mediatama Maxima and Hotel Fitra International, you can compare the effects of market volatilities on Digital Mediatama and Hotel Fitra 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 Digital Mediatama with a short position of Hotel Fitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Mediatama and Hotel Fitra.

Diversification Opportunities for Digital Mediatama and Hotel Fitra

-0.72

Correlation Coefficient

Digital Mediatama  Hotel Fitra

Pay attention - limited upside

The 3 months correlation between Digital and Hotel is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Digital Mediatama Maxima and Hotel Fitra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Fitra International and Digital Mediatama 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 Digital Mediatama Maxima are associated (or correlated) with Hotel Fitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Fitra International has no effect on the direction of Digital Mediatama i.e., Digital Mediatama and Hotel Fitra go up and down completely randomly.

Pair Corralation between Digital Mediatama and Hotel Fitra

Assuming the 90 days trading horizon Digital Mediatama Maxima is expected to generate 1.79 times more return on investment than Hotel Fitra. However, Digital Mediatama is 1.79 times more volatile than Hotel Fitra International. It trades about -0.04 of its potential returns per unit of risk. Hotel Fitra International is currently generating about -0.11 per unit of risk. If you would invest  100,500  in Digital Mediatama Maxima on September 14, 2024 and sell it today you would lose (78,100) from holding Digital Mediatama Maxima or give up 77.71% of portfolio value over 90 days.

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

Digital Mediatama Maxima  vs.  Hotel Fitra International

Digital Mediatama Maxima

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Mediatama Maxima are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Digital Mediatama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hotel Fitra International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Fitra International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Hotel Fitra 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 Digital Mediatama and Hotel Fitra

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

The idea behind Digital Mediatama Maxima and Hotel Fitra International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.