Correlation Between PT Astra and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both PT Astra and CapitaLand Investment 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 CapitaLand Investment 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 CapitaLand Investment Limited, you can compare the effects of market volatilities on PT Astra and CapitaLand Investment 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 CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and CapitaLand Investment.
Diversification Opportunities for PT Astra and CapitaLand Investment
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ASJA and CapitaLand is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment 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 CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of PT Astra i.e., PT Astra and CapitaLand Investment go up and down completely randomly.
Pair Corralation between PT Astra and CapitaLand Investment
Assuming the 90 days trading horizon PT Astra International is expected to generate 3.89 times more return on investment than CapitaLand Investment. However, PT Astra is 3.89 times more volatile than CapitaLand Investment Limited. It trades about -0.02 of its potential returns per unit of risk. CapitaLand Investment Limited is currently generating about -0.08 per unit of risk. If you would invest 30.00 in PT Astra International on August 25, 2024 and sell it today you would lose (1.00) from holding PT Astra International or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Astra International vs. CapitaLand Investment Limited
Performance |
| Timeline |
| PT Astra International |
| CapitaLand Investment |
PT Astra and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Astra and CapitaLand Investment
The main advantage of trading using opposite PT Astra and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, CapitaLand Investment 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 CapitaLand Investment will offset losses from the drop in CapitaLand Investment's long position.| PT Astra vs. CapitaLand Investment Limited | PT Astra vs. DIVERSIFIED ROYALTY | PT Astra vs. ECHO INVESTMENT ZY | PT Astra vs. SLR Investment Corp |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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