Correlation Between PT Astra and Cannabis Sativa
Can any of the company-specific risk be diversified away by investing in both PT Astra and Cannabis Sativa 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 PT Astra and Cannabis Sativa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Astra International and Cannabis Sativa, you can compare the effects of market volatilities on PT Astra and Cannabis Sativa 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 PT Astra with a short position of Cannabis Sativa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and Cannabis Sativa.
Diversification Opportunities for PT Astra and Cannabis Sativa
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASII and Cannabis is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Cannabis Sativa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannabis Sativa and PT Astra 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 PT Astra International are associated (or correlated) with Cannabis Sativa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannabis Sativa has no effect on the direction of PT Astra i.e., PT Astra and Cannabis Sativa go up and down completely randomly.
Pair Corralation between PT Astra and Cannabis Sativa
Given the investment horizon of 90 days PT Astra International is expected to generate 1.48 times more return on investment than Cannabis Sativa. However, PT Astra is 1.48 times more volatile than Cannabis Sativa. It trades about 0.09 of its potential returns per unit of risk. Cannabis Sativa is currently generating about 0.05 per unit of risk. If you would invest 0.14 in PT Astra International on August 26, 2024 and sell it today you would lose (0.08) from holding PT Astra International or give up 57.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Astra International vs. Cannabis Sativa
Performance |
| Timeline |
| PT Astra International |
| Cannabis Sativa |
PT Astra and Cannabis Sativa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Astra and Cannabis Sativa
The main advantage of trading using opposite PT Astra and Cannabis Sativa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, Cannabis Sativa 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 Cannabis Sativa will offset losses from the drop in Cannabis Sativa's long position.The idea behind PT Astra International and Cannabis Sativa 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.| Cannabis Sativa vs. Embotelladora Andina SA | Cannabis Sativa vs. Signet International Holdings | Cannabis Sativa vs. National Beverage Corp | Cannabis Sativa vs. PT Astra International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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