Correlation Between Hotel Sahid and Arthavest Tbk

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

By analyzing existing cross correlation between Hotel Sahid Jaya and Arthavest Tbk, you can compare the effects of market volatilities on Hotel Sahid and Arthavest Tbk 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 Sahid with a short position of Arthavest Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Sahid and Arthavest Tbk.

Diversification Opportunities for Hotel Sahid and Arthavest Tbk

0.26

Correlation Coefficient

Hotel Sahid  Arthavest Tbk

Modest diversification

The 3 months correlation between Hotel and Arthavest is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sahid Jaya and Arthavest Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthavest Tbk and Hotel Sahid 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 Sahid Jaya are associated (or correlated) with Arthavest Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthavest Tbk has no effect on the direction of Hotel Sahid i.e., Hotel Sahid and Arthavest Tbk go up and down completely randomly.

Pair Corralation between Hotel Sahid and Arthavest Tbk

Assuming the 90 days trading horizon Hotel Sahid Jaya is expected to generate 2.42 times more return on investment than Arthavest Tbk. However, Hotel Sahid is 2.42 times more volatile than Arthavest Tbk. It trades about -0.01 of its potential returns per unit of risk. Arthavest Tbk is currently generating about -0.13 per unit of risk. If you would invest  100,500  in Hotel Sahid Jaya on September 14, 2024 and sell it today you would lose (4,500) from holding Hotel Sahid Jaya or give up 4.48% of portfolio value over 90 days.

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

Hotel Sahid Jaya  vs.  Arthavest Tbk

Hotel Sahid Jaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotel Sahid Jaya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Hotel Sahid is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Arthavest Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arthavest Tbk 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 Hotel Sahid and Arthavest Tbk

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

The idea behind Hotel Sahid Jaya and Arthavest Tbk 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.