Correlation Between Pertamina Geothermal and Eastparc Hotel
Can any of the company-specific risk be diversified away by investing in both Pertamina Geothermal and Eastparc Hotel 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 Pertamina Geothermal and Eastparc Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pertamina Geothermal Energy and Eastparc Hotel Tbk, you can compare the effects of market volatilities on Pertamina Geothermal and Eastparc Hotel 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 Pertamina Geothermal with a short position of Eastparc Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pertamina Geothermal and Eastparc Hotel.
Diversification Opportunities for Pertamina Geothermal and Eastparc Hotel
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pertamina and Eastparc is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pertamina Geothermal Energy and Eastparc Hotel Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastparc Hotel Tbk and Pertamina Geothermal 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 Pertamina Geothermal Energy are associated (or correlated) with Eastparc Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastparc Hotel Tbk has no effect on the direction of Pertamina Geothermal i.e., Pertamina Geothermal and Eastparc Hotel go up and down completely randomly.
Pair Corralation between Pertamina Geothermal and Eastparc Hotel
Assuming the 90 days trading horizon Pertamina Geothermal Energy is expected to generate 0.73 times more return on investment than Eastparc Hotel. However, Pertamina Geothermal Energy is 1.37 times less risky than Eastparc Hotel. It trades about -0.15 of its potential returns per unit of risk. Eastparc Hotel Tbk is currently generating about -0.12 per unit of risk. If you would invest 113,000 in Pertamina Geothermal Energy on September 3, 2024 and sell it today you would lose (14,000) from holding Pertamina Geothermal Energy or give up 12.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pertamina Geothermal Energy vs. Eastparc Hotel Tbk
Performance |
| Timeline |
| Pertamina Geothermal |
| Eastparc Hotel Tbk |
Pertamina Geothermal and Eastparc Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pertamina Geothermal and Eastparc Hotel
The main advantage of trading using opposite Pertamina Geothermal and Eastparc Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pertamina Geothermal position performs unexpectedly, Eastparc Hotel 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 Eastparc Hotel will offset losses from the drop in Eastparc Hotel's long position.| Pertamina Geothermal vs. Chandra Asri Petrochemical | Pertamina Geothermal vs. Bank Negara Indonesia | Pertamina Geothermal vs. Sumber Alfaria Trijaya | Pertamina Geothermal vs. Mitra Pinasthika Mustika |
| Eastparc Hotel vs. Campina Ice Cream | Eastparc Hotel vs. Mitra Pinasthika Mustika | Eastparc Hotel vs. Jakarta Int Hotels | Eastparc Hotel vs. Indosat Tbk |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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