Correlation Between Adaro Energy and Astra International
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and Astra International 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 Adaro Energy and Astra International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adaro Energy Tbk and Astra International Tbk, you can compare the effects of market volatilities on Adaro Energy and Astra International 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 Adaro Energy with a short position of Astra International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and Astra International.
Diversification Opportunities for Adaro Energy and Astra International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Adaro and Astra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and Astra International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra International Tbk and Adaro Energy 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 Adaro Energy Tbk are associated (or correlated) with Astra International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra International Tbk has no effect on the direction of Adaro Energy i.e., Adaro Energy and Astra International go up and down completely randomly.
Pair Corralation between Adaro Energy and Astra International
Assuming the 90 days trading horizon Adaro Energy Tbk is expected to under-perform the Astra International. In addition to that, Adaro Energy is 1.18 times more volatile than Astra International Tbk. It trades about -0.03 of its total potential returns per unit of risk. Astra International Tbk is currently generating about 0.07 per unit of volatility. If you would invest 495,248 in Astra International Tbk on August 30, 2024 and sell it today you would earn a total of 22,252 from holding Astra International Tbk or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Energy Tbk vs. Astra International Tbk
Performance |
| Timeline |
| Adaro Energy Tbk |
| Astra International Tbk |
Adaro Energy and Astra International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and Astra International
The main advantage of trading using opposite Adaro Energy and Astra International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, Astra International 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 Astra International will offset losses from the drop in Astra International's long position.| Adaro Energy vs. Bukit Asam Tbk | Adaro Energy vs. Aneka Tambang Persero | Adaro Energy vs. Perusahaan Gas Negara | Adaro Energy vs. Indo Tambangraya Megah |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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