Correlation Between PT Astra and Magna International
Can any of the company-specific risk be diversified away by investing in both PT Astra and Magna International 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 Magna International 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 Magna International, you can compare the effects of market volatilities on PT Astra and Magna International 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 Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and Magna International.
Diversification Opportunities for PT Astra and Magna International
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASJA and Magna is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of PT Astra i.e., PT Astra and Magna International go up and down completely randomly.
Pair Corralation between PT Astra and Magna International
Assuming the 90 days trading horizon PT Astra is expected to generate 1.68 times less return on investment than Magna International. In addition to that, PT Astra is 1.59 times more volatile than Magna International. It trades about 0.03 of its total potential returns per unit of risk. Magna International is currently generating about 0.09 per unit of volatility. If you would invest 3,745 in Magna International on September 2, 2024 and sell it today you would earn a total of 475.00 from holding Magna International or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Astra International vs. Magna International
Performance |
| Timeline |
| PT Astra International |
| Magna International |
PT Astra and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Astra and Magna International
The main advantage of trading using opposite PT Astra and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.| PT Astra vs. Superior Plus Corp | PT Astra vs. NMI Holdings | PT Astra vs. Origin Agritech | PT Astra vs. SIVERS SEMICONDUCTORS AB |
| Magna International vs. PT Astra International | Magna International vs. Superior Plus Corp | Magna International vs. NMI Holdings | Magna International vs. Origin Agritech |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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