Correlation Between Astra International and Garudafood Putra
Can any of the company-specific risk be diversified away by investing in both Astra International and Garudafood Putra 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 Garudafood Putra 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 Garudafood Putra Putri, you can compare the effects of market volatilities on Astra International and Garudafood Putra 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 Garudafood Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra International and Garudafood Putra.
Diversification Opportunities for Astra International and Garudafood Putra
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Astra and Garudafood is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Garudafood Putra Putri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garudafood Putra Putri 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 Garudafood Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garudafood Putra Putri has no effect on the direction of Astra International i.e., Astra International and Garudafood Putra go up and down completely randomly.
Pair Corralation between Astra International and Garudafood Putra
Assuming the 90 days trading horizon Astra International Tbk is expected to generate 0.7 times more return on investment than Garudafood Putra. However, Astra International Tbk is 1.42 times less risky than Garudafood Putra. It trades about -0.11 of its potential returns per unit of risk. Garudafood Putra Putri is currently generating about -0.16 per unit of risk. If you would invest 512,500 in Astra International Tbk on September 4, 2024 and sell it today you would lose (22,500) from holding Astra International Tbk or give up 4.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Astra International Tbk vs. Garudafood Putra Putri
Performance |
| Timeline |
| Astra International Tbk |
| Garudafood Putra Putri |
Astra International and Garudafood Putra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astra International and Garudafood Putra
The main advantage of trading using opposite Astra International and Garudafood Putra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra International position performs unexpectedly, Garudafood Putra 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 Garudafood Putra will offset losses from the drop in Garudafood Putra'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 |
| Garudafood Putra vs. Astra International Tbk | Garudafood Putra vs. Unilever Indonesia Tbk | Garudafood Putra vs. Telkom Indonesia Tbk | Garudafood Putra vs. Bank Mandiri Persero |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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