Correlation Between Eastparc Hotel and PT Janu

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Can any of the company-specific risk be diversified away by investing in both Eastparc Hotel and PT Janu 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 PT Janu 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 PT Janu Putra, you can compare the effects of market volatilities on Eastparc Hotel and PT Janu 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 PT Janu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastparc Hotel and PT Janu.

Diversification Opportunities for Eastparc Hotel and PT Janu

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Eastparc and AYAM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eastparc Hotel Tbk and PT Janu Putra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Janu Putra 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 PT Janu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Janu Putra has no effect on the direction of Eastparc Hotel i.e., Eastparc Hotel and PT Janu go up and down completely randomly.

Pair Corralation between Eastparc Hotel and PT Janu

Assuming the 90 days trading horizon Eastparc Hotel is expected to generate 4.17 times less return on investment than PT Janu. But when comparing it to its historical volatility, Eastparc Hotel Tbk is 1.47 times less risky than PT Janu. It trades about 0.1 of its potential returns per unit of risk. PT Janu Putra is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  11,700  in PT Janu Putra on September 12, 2024 and sell it today you would earn a total of  3,300  from holding PT Janu Putra or generate 28.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Eastparc Hotel Tbk  vs.  PT Janu Putra

 Performance 
       Timeline  
Eastparc Hotel Tbk 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PT Janu Putra are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Janu disclosed solid returns over the last few months and may actually be approaching a breakup point.

Eastparc Hotel and PT Janu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eastparc Hotel and PT Janu

The main advantage of trading using opposite Eastparc Hotel and PT Janu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastparc Hotel position performs unexpectedly, PT Janu 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 PT Janu will offset losses from the drop in PT Janu's long position.
The idea behind Eastparc Hotel Tbk and PT Janu Putra 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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