Correlation Between Sona Topas and Hotel Sahid
Can any of the company-specific risk be diversified away by investing in both Sona Topas and Hotel Sahid 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 Sona Topas and Hotel Sahid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sona Topas Tourism and Hotel Sahid Jaya, you can compare the effects of market volatilities on Sona Topas and Hotel Sahid 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 Sona Topas with a short position of Hotel Sahid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sona Topas and Hotel Sahid.
Diversification Opportunities for Sona Topas and Hotel Sahid
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sona and Hotel is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sona Topas Tourism and Hotel Sahid Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Sahid Jaya and Sona Topas 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 Sona Topas Tourism are associated (or correlated) with Hotel Sahid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Sahid Jaya has no effect on the direction of Sona Topas i.e., Sona Topas and Hotel Sahid go up and down completely randomly.
Pair Corralation between Sona Topas and Hotel Sahid
Assuming the 90 days trading horizon Sona Topas Tourism is expected to under-perform the Hotel Sahid. In addition to that, Sona Topas is 1.19 times more volatile than Hotel Sahid Jaya. It trades about -0.4 of its total potential returns per unit of risk. Hotel Sahid Jaya is currently generating about -0.16 per unit of volatility. If you would invest 104,500 in Hotel Sahid Jaya on August 31, 2024 and sell it today you would lose (11,000) from holding Hotel Sahid Jaya or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sona Topas Tourism vs. Hotel Sahid Jaya
Performance |
| Timeline |
| Sona Topas Tourism |
| Hotel Sahid Jaya |
Sona Topas and Hotel Sahid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sona Topas and Hotel Sahid
The main advantage of trading using opposite Sona Topas and Hotel Sahid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sona Topas position performs unexpectedly, Hotel Sahid 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 Hotel Sahid will offset losses from the drop in Hotel Sahid's long position.| Sona Topas vs. Japfa Comfeed Indonesia | Sona Topas vs. Charoen Pokphand Indonesia | Sona Topas vs. Erajaya Swasembada Tbk | Sona Topas vs. Indofood Cbp Sukses |
| Hotel Sahid vs. Japfa Comfeed Indonesia | Hotel Sahid vs. Charoen Pokphand Indonesia | Hotel Sahid vs. Erajaya Swasembada Tbk | Hotel Sahid vs. Indofood Cbp Sukses |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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