Correlation Between Astra International and Astra Agro
Can any of the company-specific risk be diversified away by investing in both Astra International and Astra Agro 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 International and Astra Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astra International Tbk and Astra Agro Lestari, you can compare the effects of market volatilities on Astra International and Astra Agro 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 International with a short position of Astra Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra International and Astra Agro.
Diversification Opportunities for Astra International and Astra Agro
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Astra and Astra is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Astra Agro Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Agro Lestari and Astra International 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 International Tbk are associated (or correlated) with Astra Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Agro Lestari has no effect on the direction of Astra International i.e., Astra International and Astra Agro go up and down completely randomly.
Pair Corralation between Astra International and Astra Agro
Assuming the 90 days trading horizon Astra International Tbk is expected to generate 1.55 times more return on investment than Astra Agro. However, Astra International is 1.55 times more volatile than Astra Agro Lestari. It trades about 0.03 of its potential returns per unit of risk. Astra Agro Lestari is currently generating about -0.33 per unit of risk. If you would invest 512,500 in Astra International Tbk on August 30, 2024 and sell it today you would earn a total of 5,000 from holding Astra International Tbk or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astra International Tbk vs. Astra Agro Lestari
Performance |
| Timeline |
| Astra International Tbk |
| Astra Agro Lestari |
Astra International and Astra Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astra International and Astra Agro
The main advantage of trading using opposite Astra International and Astra Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra International position performs unexpectedly, Astra Agro 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 Agro will offset losses from the drop in Astra Agro's long position.| Astra International vs. Telkom Indonesia Tbk | Astra International vs. Bank Mandiri Persero | Astra International vs. Bank Central Asia | Astra International vs. PT Indofood Sukses |
| Astra Agro vs. Perusahaan Perkebunan London | Astra Agro vs. United Tractors Tbk | Astra Agro vs. Vale Indonesia Tbk | Astra Agro vs. Astra International 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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