Correlation Between PT Astra and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both PT Astra and Sumitomo Electric 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 Sumitomo Electric 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 Sumitomo Electric Industries, you can compare the effects of market volatilities on PT Astra and Sumitomo Electric 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 Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and Sumitomo Electric.
Diversification Opportunities for PT Astra and Sumitomo Electric
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PTAIF and Sumitomo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Electric 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 Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of PT Astra i.e., PT Astra and Sumitomo Electric go up and down completely randomly.
Pair Corralation between PT Astra and Sumitomo Electric
Assuming the 90 days horizon PT Astra International is expected to generate 5.84 times more return on investment than Sumitomo Electric. However, PT Astra is 5.84 times more volatile than Sumitomo Electric Industries. It trades about 0.03 of its potential returns per unit of risk. Sumitomo Electric Industries is currently generating about 0.09 per unit of risk. If you would invest 40.00 in PT Astra International on August 26, 2024 and sell it today you would lose (3.00) from holding PT Astra International or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 63.78% |
| Values | Daily Returns |
PT Astra International vs. Sumitomo Electric Industries
Performance |
| Timeline |
| PT Astra International |
| Sumitomo Electric |
PT Astra and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Astra and Sumitomo Electric
The main advantage of trading using opposite PT Astra and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, Sumitomo Electric 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 Sumitomo Electric will offset losses from the drop in Sumitomo Electric's long position.| PT Astra vs. Allison Transmission Holdings | PT Astra vs. Luminar Technologies | PT Astra vs. Lear Corporation | PT Astra vs. BorgWarner |
| Sumitomo Electric vs. Getty Images Holdings | Sumitomo Electric vs. Glacier Bancorp | Sumitomo Electric vs. Juniata Valley Financial | Sumitomo Electric vs. Encore Capital Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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