Correlation Between Perusahaan Perseroan and Summit Hotel

Can any of the company-specific risk be diversified away by investing in both Perusahaan Perseroan and Summit 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 Perusahaan Perseroan and Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perusahaan Perseroan PT and Summit Hotel Properties, you can compare the effects of market volatilities on Perusahaan Perseroan and Summit 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 Perusahaan Perseroan with a short position of Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Perseroan and Summit Hotel.

Diversification Opportunities for Perusahaan Perseroan and Summit Hotel

0.69

Correlation Coefficient

Perusahaan Perseroan  Summit Hotel

Poor diversification

The 3 months correlation between Perusahaan and Summit is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties and Perusahaan Perseroan 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 Perusahaan Perseroan PT are associated (or correlated) with Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and Summit Hotel go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Summit Hotel

Assuming the 90 days horizon Perusahaan Perseroan is expected to generate 1.75 times less return on investment than Summit Hotel. But when comparing it to its historical volatility, Perusahaan Perseroan PT is 1.42 times less risky than Summit Hotel. It trades about 0.15 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  326.00  in Summit Hotel Properties on April 20, 2025 and sell it today you would earn a total of  122.00  from holding Summit Hotel Properties or generate 37.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Perusahaan Perseroan PT  vs.  Summit Hotel Properties

Perusahaan Perseroan

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perusahaan Perseroan PT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Perusahaan Perseroan reported solid returns over the last few months and may actually be approaching a breakup point.

Summit Hotel Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Hotel Properties are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Summit Hotel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perusahaan Perseroan and Summit Hotel

The main advantage of trading using opposite Perusahaan Perseroan and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perusahaan Perseroan position performs unexpectedly, Summit 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.

The idea behind Perusahaan Perseroan PT and Summit Hotel Properties 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.