Correlation Between Astra International and Indo Tambangraya
Can any of the company-specific risk be diversified away by investing in both Astra International and Indo Tambangraya 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 Indo Tambangraya 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 Indo Tambangraya Megah, you can compare the effects of market volatilities on Astra International and Indo Tambangraya 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 Indo Tambangraya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra International and Indo Tambangraya.
Diversification Opportunities for Astra International and Indo Tambangraya
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astra and Indo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Indo Tambangraya Megah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Tambangraya Megah 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 Indo Tambangraya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Tambangraya Megah has no effect on the direction of Astra International i.e., Astra International and Indo Tambangraya go up and down completely randomly.
Pair Corralation between Astra International and Indo Tambangraya
Assuming the 90 days trading horizon Astra International Tbk is expected to generate 0.82 times more return on investment than Indo Tambangraya. However, Astra International Tbk is 1.22 times less risky than Indo Tambangraya. It trades about 0.02 of its potential returns per unit of risk. Indo Tambangraya Megah is currently generating about 0.01 per unit of risk. If you would invest 460,112 in Astra International Tbk on August 30, 2024 and sell it today you would earn a total of 57,388 from holding Astra International Tbk or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astra International Tbk vs. Indo Tambangraya Megah
Performance |
| Timeline |
| Astra International Tbk |
| Indo Tambangraya Megah |
Astra International and Indo Tambangraya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astra International and Indo Tambangraya
The main advantage of trading using opposite Astra International and Indo Tambangraya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra International position performs unexpectedly, Indo Tambangraya 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 Indo Tambangraya will offset losses from the drop in Indo Tambangraya'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 |
| Indo Tambangraya vs. Bukit Asam Tbk | Indo Tambangraya vs. Adaro Energy Tbk | Indo Tambangraya vs. United Tractors Tbk | Indo Tambangraya vs. Vale Indonesia 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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