Correlation Between PT Astra and George Weston
Can any of the company-specific risk be diversified away by investing in both PT Astra and George Weston 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 George Weston 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 George Weston Limited, you can compare the effects of market volatilities on PT Astra and George Weston 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 George Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and George Weston.
Diversification Opportunities for PT Astra and George Weston
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASII and George is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and George Weston Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston Limited 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 George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston Limited has no effect on the direction of PT Astra i.e., PT Astra and George Weston go up and down completely randomly.
Pair Corralation between PT Astra and George Weston
Given the investment horizon of 90 days PT Astra International is expected to generate 12.1 times more return on investment than George Weston. However, PT Astra is 12.1 times more volatile than George Weston Limited. It trades about 0.09 of its potential returns per unit of risk. George Weston Limited is currently generating about 0.04 per unit of risk. If you would invest 0.13 in PT Astra International on August 30, 2024 and sell it today you would lose (0.09) from holding PT Astra International or give up 69.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.2% |
| Values | Daily Returns |
PT Astra International vs. George Weston Limited
Performance |
| Timeline |
| PT Astra International |
| George Weston Limited |
PT Astra and George Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Astra and George Weston
The main advantage of trading using opposite PT Astra and George Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, George Weston 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 George Weston will offset losses from the drop in George Weston's long position.The idea behind PT Astra International and George Weston Limited 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.| George Weston vs. Embotelladora Andina SA | George Weston vs. Signet International Holdings | George Weston vs. National Beverage Corp | George Weston 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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