Correlation Between Astra Agro and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Astra Agro and Australian Agricultural 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 Astra Agro and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astra Agro Lestari and Australian Agricultural, you can compare the effects of market volatilities on Astra Agro and Australian Agricultural 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 Astra Agro with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Agro and Australian Agricultural.
Diversification Opportunities for Astra Agro and Australian Agricultural
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Astra and Australian is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Astra Agro Lestari and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and Astra Agro 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 Astra Agro Lestari are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Astra Agro i.e., Astra Agro and Australian Agricultural go up and down completely randomly.
Pair Corralation between Astra Agro and Australian Agricultural
Assuming the 90 days horizon Astra Agro Lestari is expected to generate 1.37 times more return on investment than Australian Agricultural. However, Astra Agro is 1.37 times more volatile than Australian Agricultural. It trades about -0.02 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.02 per unit of risk. If you would invest 232.00 in Astra Agro Lestari on August 28, 2024 and sell it today you would lose (53.00) from holding Astra Agro Lestari or give up 22.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 60.61% |
| Values | Daily Returns |
Astra Agro Lestari vs. Australian Agricultural
Performance |
| Timeline |
| Astra Agro Lestari |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Australian Agricultural |
Astra Agro and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astra Agro and Australian Agricultural
The main advantage of trading using opposite Astra Agro and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra Agro position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Astra Agro vs. Forafric Global PLC | Astra Agro vs. Forafric Global PLC | Astra Agro vs. Australian Agricultural | Astra Agro vs. Limoneira Co |
| Australian Agricultural vs. Avi Ltd ADR | Australian Agricultural vs. Altavoz Entertainment | Australian Agricultural vs. Aryzta AG PK | Australian Agricultural vs. Artisan Consumer Goods |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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