Correlation Between Astra Agro and Resource Alam
Can any of the company-specific risk be diversified away by investing in both Astra Agro and Resource Alam 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 Resource Alam 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 Resource Alam Indonesia, you can compare the effects of market volatilities on Astra Agro and Resource Alam 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 Resource Alam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Agro and Resource Alam.
Diversification Opportunities for Astra Agro and Resource Alam
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astra and Resource is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Astra Agro Lestari and Resource Alam Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Alam Indonesia 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 Resource Alam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Alam Indonesia has no effect on the direction of Astra Agro i.e., Astra Agro and Resource Alam go up and down completely randomly.
Pair Corralation between Astra Agro and Resource Alam
Assuming the 90 days trading horizon Astra Agro Lestari is expected to under-perform the Resource Alam. But the stock apears to be less risky and, when comparing its historical volatility, Astra Agro Lestari is 2.08 times less risky than Resource Alam. The stock trades about -0.35 of its potential returns per unit of risk. The Resource Alam Indonesia is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 56,000 in Resource Alam Indonesia on August 27, 2024 and sell it today you would lose (3,500) from holding Resource Alam Indonesia or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astra Agro Lestari vs. Resource Alam Indonesia
Performance |
| Timeline |
| Astra Agro Lestari |
| Resource Alam Indonesia |
Astra Agro and Resource Alam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astra Agro and Resource Alam
The main advantage of trading using opposite Astra Agro and Resource Alam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra Agro position performs unexpectedly, Resource Alam 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 Resource Alam will offset losses from the drop in Resource Alam's long position.| Astra Agro vs. Perusahaan Perkebunan London | Astra Agro vs. United Tractors Tbk | Astra Agro vs. Vale Indonesia Tbk | Astra Agro vs. Astra International Tbk |
| Resource Alam vs. Petrosea Tbk | Resource Alam vs. Harum Energy Tbk | Resource Alam vs. Perdana Karya Perkasa | Resource Alam vs. Bayan Resources 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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