Correlation Between PT Astra and Continental Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both PT Astra and Continental Aktiengesellscha 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 Continental Aktiengesellscha 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 Continental Aktiengesellschaft, you can compare the effects of market volatilities on PT Astra and Continental Aktiengesellscha 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 Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and Continental Aktiengesellscha.
Diversification Opportunities for PT Astra and Continental Aktiengesellscha
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASJA and Continental is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha 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 Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of PT Astra i.e., PT Astra and Continental Aktiengesellscha go up and down completely randomly.
Pair Corralation between PT Astra and Continental Aktiengesellscha
Assuming the 90 days trading horizon PT Astra International is expected to generate 2.26 times more return on investment than Continental Aktiengesellscha. However, PT Astra is 2.26 times more volatile than Continental Aktiengesellschaft. It trades about 0.02 of its potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.02 per unit of risk. If you would invest 32.00 in PT Astra International on September 23, 2024 and sell it today you would lose (2.00) from holding PT Astra International or give up 6.25% 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. Continental Aktiengesellschaft
Performance |
| Timeline |
| PT Astra International |
| Continental Aktiengesellscha |
PT Astra and Continental Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Astra and Continental Aktiengesellscha
The main advantage of trading using opposite PT Astra and Continental Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, Continental Aktiengesellscha 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 Continental Aktiengesellscha will offset losses from the drop in Continental Aktiengesellscha's long position.The idea behind PT Astra International and Continental Aktiengesellschaft 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.| Continental Aktiengesellscha vs. Dno ASA | Continental Aktiengesellscha vs. DENSO P ADR | Continental Aktiengesellscha vs. Aptiv PLC | Continental Aktiengesellscha 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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