Correlation Between Magna International and PT Astra
Can any of the company-specific risk be diversified away by investing in both Magna International and PT Astra 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 Magna International and PT Astra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and PT Astra International, you can compare the effects of market volatilities on Magna International and PT Astra 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 Magna International with a short position of PT Astra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and PT Astra.
Diversification Opportunities for Magna International and PT Astra
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magna and ASJA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and PT Astra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Astra International and Magna International 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 Magna International are associated (or correlated) with PT Astra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Astra International has no effect on the direction of Magna International i.e., Magna International and PT Astra go up and down completely randomly.
Pair Corralation between Magna International and PT Astra
Assuming the 90 days horizon Magna International is expected to generate 0.63 times more return on investment than PT Astra. However, Magna International is 1.59 times less risky than PT Astra. It trades about 0.09 of its potential returns per unit of risk. PT Astra International is currently generating about 0.03 per unit of risk. 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 |
Magna International vs. PT Astra International
Performance |
| Timeline |
| Magna International |
| PT Astra International |
Magna International and PT Astra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and PT Astra
The main advantage of trading using opposite Magna International and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, PT Astra 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 PT Astra will offset losses from the drop in PT Astra's long position.| Magna International vs. PT Astra International | Magna International vs. Superior Plus Corp | Magna International vs. NMI Holdings | Magna International vs. Origin Agritech |
| PT Astra vs. Superior Plus Corp | PT Astra vs. NMI Holdings | PT Astra vs. Origin Agritech | PT Astra vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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