Correlation Between Barloworld and Astra International
Can any of the company-specific risk be diversified away by investing in both Barloworld and Astra 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 Barloworld and Astra International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and Astra International Tbk, you can compare the effects of market volatilities on Barloworld and Astra 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 Barloworld with a short position of Astra International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Astra International.
Diversification Opportunities for Barloworld and Astra International
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Astra is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Astra International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra International Tbk and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Astra International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra International Tbk has no effect on the direction of Barloworld i.e., Barloworld and Astra International go up and down completely randomly.
Pair Corralation between Barloworld and Astra International
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 3.64 times more return on investment than Astra International. However, Barloworld is 3.64 times more volatile than Astra International Tbk. It trades about 0.22 of its potential returns per unit of risk. Astra International Tbk is currently generating about 0.04 per unit of risk. If you would invest 423.00 in Barloworld Ltd ADR on September 13, 2024 and sell it today you would earn a total of 202.00 from holding Barloworld Ltd ADR or generate 47.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Astra International Tbk
Performance |
| Timeline |
| Barloworld ADR |
| Astra International Tbk |
Barloworld and Astra International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Astra International
The main advantage of trading using opposite Barloworld and Astra International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Astra 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 Astra International will offset losses from the drop in Astra International's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Astra International vs. Allison Transmission Holdings | Astra International vs. Luminar Technologies | Astra International vs. Lear Corporation | Astra International vs. BorgWarner |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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