Correlation Between Astra International and Compass Group
Can any of the company-specific risk be diversified away by investing in both Astra International and Compass Group 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 Astra International and Compass Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astra International Tbk and Compass Group PLC, you can compare the effects of market volatilities on Astra International and Compass Group 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 Astra International with a short position of Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra International and Compass Group.
Diversification Opportunities for Astra International and Compass Group
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astra and Compass is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC and Astra 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 Astra International Tbk are associated (or correlated) with Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Astra International i.e., Astra International and Compass Group go up and down completely randomly.
Pair Corralation between Astra International and Compass Group
Assuming the 90 days horizon Astra International Tbk is expected to under-perform the Compass Group. In addition to that, Astra International is 2.07 times more volatile than Compass Group PLC. It trades about -0.13 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.15 per unit of volatility. If you would invest 3,216 in Compass Group PLC on August 28, 2024 and sell it today you would earn a total of 117.00 from holding Compass Group PLC or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astra International Tbk vs. Compass Group PLC
Performance |
| Timeline |
| Astra International Tbk |
| Compass Group PLC |
Astra International and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astra International and Compass Group
The main advantage of trading using opposite Astra International and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra International position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group's long position.| Astra International vs. Allison Transmission Holdings | Astra International vs. Luminar Technologies | Astra International vs. Lear Corporation | Astra International vs. BorgWarner |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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