Correlation Between PT Astra and Eastgate Biotech

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Can any of the company-specific risk be diversified away by investing in both PT Astra and Eastgate Biotech 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 Eastgate Biotech 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 Eastgate Biotech Corp, you can compare the effects of market volatilities on PT Astra and Eastgate Biotech 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 Eastgate Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and Eastgate Biotech.

Diversification Opportunities for PT Astra and Eastgate Biotech

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between PTAIF and Eastgate is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Eastgate Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastgate Biotech Corp 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 Eastgate Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastgate Biotech Corp has no effect on the direction of PT Astra i.e., PT Astra and Eastgate Biotech go up and down completely randomly.

Pair Corralation between PT Astra and Eastgate Biotech

Assuming the 90 days horizon PT Astra is expected to generate 182.3 times less return on investment than Eastgate Biotech. But when comparing it to its historical volatility, PT Astra International is 60.71 times less risky than Eastgate Biotech. It trades about 0.05 of its potential returns per unit of risk. Eastgate Biotech Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Eastgate Biotech Corp on September 12, 2024 and sell it today you would lose (0.55) from holding Eastgate Biotech Corp or give up 55.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.38%
ValuesDaily Returns

PT Astra International  vs.  Eastgate Biotech Corp

 Performance 
       Timeline  
PT Astra International 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, PT Astra reported solid returns over the last few months and may actually be approaching a breakup point.
Eastgate Biotech Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eastgate Biotech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Eastgate Biotech is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

PT Astra and Eastgate Biotech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Astra and Eastgate Biotech

The main advantage of trading using opposite PT Astra and Eastgate Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, Eastgate Biotech 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 Eastgate Biotech will offset losses from the drop in Eastgate Biotech's long position.
The idea behind PT Astra International and Eastgate Biotech Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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