Correlation Between BorgWarner and Astra International
Can any of the company-specific risk be diversified away by investing in both BorgWarner 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 BorgWarner and Astra International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BorgWarner and Astra International Tbk, you can compare the effects of market volatilities on BorgWarner 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 BorgWarner with a short position of Astra International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BorgWarner and Astra International.
Diversification Opportunities for BorgWarner and Astra International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BorgWarner and Astra is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner 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 BorgWarner 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 BorgWarner 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 BorgWarner i.e., BorgWarner and Astra International go up and down completely randomly.
Pair Corralation between BorgWarner and Astra International
Considering the 90-day investment horizon BorgWarner is expected to under-perform the Astra International. But the stock apears to be less risky and, when comparing its historical volatility, BorgWarner is 1.06 times less risky than Astra International. The stock trades about -0.04 of its potential returns per unit of risk. The Astra International Tbk is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 603.00 in Astra International Tbk on October 25, 2024 and sell it today you would earn a total of 1.00 from holding Astra International Tbk or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BorgWarner vs. Astra International Tbk
Performance |
| Timeline |
| BorgWarner |
| Astra International Tbk |
BorgWarner and Astra International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BorgWarner and Astra International
The main advantage of trading using opposite BorgWarner and Astra International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner 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.| BorgWarner vs. Lear Corporation | BorgWarner vs. Autoliv | BorgWarner vs. Fox Factory Holding | BorgWarner vs. LKQ Corporation |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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