Correlation Between PT Astra and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both PT Astra and NorAm Drilling 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 NorAm Drilling 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 NorAm Drilling AS, you can compare the effects of market volatilities on PT Astra and NorAm Drilling 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 NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and NorAm Drilling.
Diversification Opportunities for PT Astra and NorAm Drilling
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between ASJA and NorAm is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of PT Astra i.e., PT Astra and NorAm Drilling go up and down completely randomly.
Pair Corralation between PT Astra and NorAm Drilling
Assuming the 90 days trading horizon PT Astra International is expected to generate 0.86 times more return on investment than NorAm Drilling. However, PT Astra International is 1.17 times less risky than NorAm Drilling. It trades about 0.02 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about 0.01 per unit of risk. If you would invest 29.00 in PT Astra International on August 28, 2024 and sell it today you would earn a total of 0.00 from holding PT Astra International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Astra International vs. NorAm Drilling AS
Performance |
| Timeline |
| PT Astra International |
| NorAm Drilling AS |
PT Astra and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Astra and NorAm Drilling
The main advantage of trading using opposite PT Astra and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling's long position.| PT Astra vs. Lion One Metals | PT Astra vs. UNITED RENTALS | PT Astra vs. PLAY2CHILL SA ZY | PT Astra vs. VIAPLAY GROUP AB |
| NorAm Drilling vs. Air Transport Services | NorAm Drilling vs. Pembina Pipeline Corp | NorAm Drilling vs. NAKED WINES PLC | NorAm Drilling vs. Fukuyama Transporting Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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