Correlation Between PT Astra and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both PT Astra and Freedom Bank 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 Freedom Bank 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 Freedom Bank of, you can compare the effects of market volatilities on PT Astra and Freedom Bank 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 Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and Freedom Bank.
Diversification Opportunities for PT Astra and Freedom Bank
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PTAIF and Freedom is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank 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 Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of PT Astra i.e., PT Astra and Freedom Bank go up and down completely randomly.
Pair Corralation between PT Astra and Freedom Bank
Assuming the 90 days horizon PT Astra International is expected to generate 2.72 times more return on investment than Freedom Bank. However, PT Astra is 2.72 times more volatile than Freedom Bank of. It trades about 0.23 of its potential returns per unit of risk. Freedom Bank of is currently generating about -0.03 per unit of risk. If you would invest 27.00 in PT Astra International on November 2, 2024 and sell it today you would earn a total of 3.00 from holding PT Astra International or generate 11.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
PT Astra International vs. Freedom Bank of
Performance |
Timeline |
PT Astra International |
Freedom Bank |
PT Astra and Freedom Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Astra and Freedom Bank
The main advantage of trading using opposite PT Astra and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.PT Astra vs. Sumitomo Chemical Co | PT Astra vs. AB SKF | PT Astra vs. Adecco Group | PT Astra vs. Nitto Denko Corp |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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