Correlation Between Eastparc Hotel and Adaro Energy
Can any of the company-specific risk be diversified away by investing in both Eastparc Hotel and Adaro Energy 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 Eastparc Hotel and Adaro Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastparc Hotel Tbk and Adaro Energy Tbk, you can compare the effects of market volatilities on Eastparc Hotel and Adaro Energy 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 Eastparc Hotel with a short position of Adaro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastparc Hotel and Adaro Energy.
Diversification Opportunities for Eastparc Hotel and Adaro Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eastparc and Adaro is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eastparc Hotel Tbk and Adaro Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Energy Tbk and Eastparc Hotel 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 Eastparc Hotel Tbk are associated (or correlated) with Adaro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Energy Tbk has no effect on the direction of Eastparc Hotel i.e., Eastparc Hotel and Adaro Energy go up and down completely randomly.
Pair Corralation between Eastparc Hotel and Adaro Energy
Assuming the 90 days trading horizon Eastparc Hotel Tbk is expected to under-perform the Adaro Energy. But the stock apears to be less risky and, when comparing its historical volatility, Eastparc Hotel Tbk is 1.77 times less risky than Adaro Energy. The stock trades about -0.06 of its potential returns per unit of risk. The Adaro Energy Tbk is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 216,368 in Adaro Energy Tbk on September 2, 2024 and sell it today you would lose (8,368) from holding Adaro Energy Tbk or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastparc Hotel Tbk vs. Adaro Energy Tbk
Performance |
| Timeline |
| Eastparc Hotel Tbk |
| Adaro Energy Tbk |
Eastparc Hotel and Adaro Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastparc Hotel and Adaro Energy
The main advantage of trading using opposite Eastparc Hotel and Adaro Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastparc Hotel position performs unexpectedly, Adaro Energy 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 Adaro Energy will offset losses from the drop in Adaro Energy's long position.| Eastparc Hotel vs. Jasa Armada Indonesia | Eastparc Hotel vs. Cahayaputra Asa Keramik | Eastparc Hotel vs. Campina Ice Cream | Eastparc Hotel vs. Integra Indocabinet Tbk |
| Adaro Energy vs. Bukit Asam Tbk | Adaro Energy vs. Aneka Tambang Persero | Adaro Energy vs. Perusahaan Gas Negara | Adaro Energy vs. Indo Tambangraya Megah |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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