Correlation Between Hotel Fitra and Citra Putra

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

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

Diversification Opportunities for Hotel Fitra and Citra Putra

-0.7

Correlation Coefficient

Hotel Fitra  Citra Putra

Excellent diversification

The 3 months correlation between Hotel and Citra is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Fitra International and Citra Putra Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citra Putra Realty and Hotel Fitra 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 Fitra International are associated (or correlated) with Citra Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citra Putra Realty has no effect on the direction of Hotel Fitra i.e., Hotel Fitra and Citra Putra go up and down completely randomly.

Pair Corralation between Hotel Fitra and Citra Putra

Assuming the 90 days trading horizon Hotel Fitra International is expected to under-perform the Citra Putra. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Fitra International is 4.83 times less risky than Citra Putra. The stock trades about -0.1 of its potential returns per unit of risk. The Citra Putra Realty is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  16,600  in Citra Putra Realty on September 14, 2024 and sell it today you would earn a total of  10,000  from holding Citra Putra Realty or generate 60.24% return on investment over 90 days.

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

Hotel Fitra International  vs.  Citra Putra Realty

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.

Citra Putra Realty

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citra Putra Realty are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Citra Putra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hotel Fitra and Citra Putra

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

The idea behind Hotel Fitra International and Citra Putra Realty 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 Transaction History module to view history of all your transactions and understand their impact on performance.