Correlation Between Eastparc Hotel and Era Media

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

Diversification Opportunities for Eastparc Hotel and Era Media

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Eastparc and Era is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eastparc Hotel Tbk and Era Media Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Media Sejahtera 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 Era Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Media Sejahtera has no effect on the direction of Eastparc Hotel i.e., Eastparc Hotel and Era Media go up and down completely randomly.

Pair Corralation between Eastparc Hotel and Era Media

Assuming the 90 days trading horizon Eastparc Hotel Tbk is expected to generate 1.51 times more return on investment than Era Media. However, Eastparc Hotel is 1.51 times more volatile than Era Media Sejahtera. It trades about -0.11 of its potential returns per unit of risk. Era Media Sejahtera is currently generating about -0.23 per unit of risk. If you would invest  11,600  in Eastparc Hotel Tbk on August 24, 2024 and sell it today you would lose (900.00) from holding Eastparc Hotel Tbk or give up 7.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Eastparc Hotel Tbk  vs.  Era Media Sejahtera

 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 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.
Era Media Sejahtera 

Risk-Adjusted Performance

0 of 100

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

Eastparc Hotel and Era Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eastparc Hotel and Era Media

The main advantage of trading using opposite Eastparc Hotel and Era Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastparc Hotel position performs unexpectedly, Era Media 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 Era Media will offset losses from the drop in Era Media's long position.
The idea behind Eastparc Hotel Tbk and Era Media Sejahtera 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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