Correlation Between Austindo Nusantara and Hero Supermarket

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Can any of the company-specific risk be diversified away by investing in both Austindo Nusantara and Hero Supermarket 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 Austindo Nusantara and Hero Supermarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austindo Nusantara Jaya and Hero Supermarket Tbk, you can compare the effects of market volatilities on Austindo Nusantara and Hero Supermarket 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 Austindo Nusantara with a short position of Hero Supermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austindo Nusantara and Hero Supermarket.

Diversification Opportunities for Austindo Nusantara and Hero Supermarket

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Austindo and Hero is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Austindo Nusantara Jaya and Hero Supermarket Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hero Supermarket Tbk and Austindo Nusantara 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 Austindo Nusantara Jaya are associated (or correlated) with Hero Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hero Supermarket Tbk has no effect on the direction of Austindo Nusantara i.e., Austindo Nusantara and Hero Supermarket go up and down completely randomly.

Pair Corralation between Austindo Nusantara and Hero Supermarket

Assuming the 90 days trading horizon Austindo Nusantara Jaya is expected to generate 0.74 times more return on investment than Hero Supermarket. However, Austindo Nusantara Jaya is 1.35 times less risky than Hero Supermarket. It trades about 0.03 of its potential returns per unit of risk. Hero Supermarket Tbk is currently generating about -0.06 per unit of risk. If you would invest  61,992  in Austindo Nusantara Jaya on September 12, 2024 and sell it today you would earn a total of  11,508  from holding Austindo Nusantara Jaya or generate 18.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.79%
ValuesDaily Returns

Austindo Nusantara Jaya  vs.  Hero Supermarket Tbk

 Performance 
       Timeline  
Austindo Nusantara Jaya 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Austindo Nusantara Jaya are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Austindo Nusantara is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Hero Supermarket Tbk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hero Supermarket Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Hero Supermarket is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Austindo Nusantara and Hero Supermarket Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Austindo Nusantara and Hero Supermarket

The main advantage of trading using opposite Austindo Nusantara and Hero Supermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austindo Nusantara position performs unexpectedly, Hero Supermarket 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 Hero Supermarket will offset losses from the drop in Hero Supermarket's long position.
The idea behind Austindo Nusantara Jaya and Hero Supermarket Tbk 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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