Correlation Between Astra Otoparts and Polychem Indonesia
Can any of the company-specific risk be diversified away by investing in both Astra Otoparts and Polychem Indonesia 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 Astra Otoparts and Polychem Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astra Otoparts Tbk and Polychem Indonesia Tbk, you can compare the effects of market volatilities on Astra Otoparts and Polychem Indonesia 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 Astra Otoparts with a short position of Polychem Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Otoparts and Polychem Indonesia.
Diversification Opportunities for Astra Otoparts and Polychem Indonesia
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Astra and Polychem is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Astra Otoparts Tbk and Polychem Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polychem Indonesia Tbk and Astra Otoparts 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 Astra Otoparts Tbk are associated (or correlated) with Polychem Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polychem Indonesia Tbk has no effect on the direction of Astra Otoparts i.e., Astra Otoparts and Polychem Indonesia go up and down completely randomly.
Pair Corralation between Astra Otoparts and Polychem Indonesia
Assuming the 90 days trading horizon Astra Otoparts Tbk is expected to generate 1.04 times more return on investment than Polychem Indonesia. However, Astra Otoparts is 1.04 times more volatile than Polychem Indonesia Tbk. It trades about 0.04 of its potential returns per unit of risk. Polychem Indonesia Tbk is currently generating about -0.01 per unit of risk. If you would invest 152,968 in Astra Otoparts Tbk on November 27, 2024 and sell it today you would earn a total of 52,032 from holding Astra Otoparts Tbk or generate 34.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Astra Otoparts Tbk vs. Polychem Indonesia Tbk
Performance |
| Timeline |
| Astra Otoparts Tbk |
| Polychem Indonesia Tbk |
Astra Otoparts and Polychem Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astra Otoparts and Polychem Indonesia
The main advantage of trading using opposite Astra Otoparts and Polychem Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra Otoparts position performs unexpectedly, Polychem Indonesia 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 Polychem Indonesia will offset losses from the drop in Polychem Indonesia's long position.| Astra Otoparts vs. Gajah Tunggal Tbk | Astra Otoparts vs. Astra Graphia Tbk | Astra Otoparts vs. Indomobil Sukses Internasional | Astra Otoparts vs. Astra Agro Lestari |
| Polychem Indonesia vs. Gajah Tunggal Tbk | Polychem Indonesia vs. Astra Graphia Tbk | Polychem Indonesia vs. Citra Marga Nusaphala | Polychem Indonesia vs. Sentul City Tbk |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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