Correlation Between Hotel Sahid and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both Hotel Sahid and Steel Pipe 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 Steel Pipe 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 Steel Pipe Industry, you can compare the effects of market volatilities on Hotel Sahid and Steel Pipe 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 Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Sahid and Steel Pipe.
Diversification Opportunities for Hotel Sahid and Steel Pipe
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hotel and Steel is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Sahid Jaya and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry 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 Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Hotel Sahid i.e., Hotel Sahid and Steel Pipe go up and down completely randomly.
Pair Corralation between Hotel Sahid and Steel Pipe
Assuming the 90 days trading horizon Hotel Sahid Jaya is expected to generate 4.7 times more return on investment than Steel Pipe. However, Hotel Sahid is 4.7 times more volatile than Steel Pipe Industry. It trades about -0.04 of its potential returns per unit of risk. Steel Pipe Industry is currently generating about -0.44 per unit of risk. If you would invest 94,500 in Hotel Sahid Jaya on August 27, 2024 and sell it today you would lose (4,000) from holding Hotel Sahid Jaya or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Sahid Jaya vs. Steel Pipe Industry
Performance |
| Timeline |
| Hotel Sahid Jaya |
| Steel Pipe Industry |
Hotel Sahid and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Sahid and Steel Pipe
The main advantage of trading using opposite Hotel Sahid and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Sahid position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe's long position.| Hotel Sahid vs. Pembangunan Jaya Ancol | Hotel Sahid vs. Panorama Sentrawisata Tbk | Hotel Sahid vs. Sona Topas Tourism | Hotel Sahid vs. Millennium Pharmacon International |
| Steel Pipe vs. Semen Baturaja Persero | Steel Pipe vs. Bekasi Fajar Industrial | Steel Pipe vs. Krakatau Steel Persero | Steel Pipe vs. Saranacentral Bajatama 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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