Correlation Between SMA Solar and PT Astra
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and PT Astra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and PT Astra International, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of PT Astra. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and PT Astra.
Diversification Opportunities for SMA Solar and PT Astra
Significant diversification
The 3 months correlation between SMA and ASJA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology 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 SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and PT Astra go up and down completely randomly.
Pair Corralation between SMA Solar and PT Astra
Assuming the 90 days horizon SMA Solar Technology is expected to generate 0.85 times more return on investment than PT Astra. However, SMA Solar Technology is 1.18 times less risky than PT Astra. It trades about 0.01 of its potential returns per unit of risk. PT Astra International is currently generating about 0.0 per unit of risk. If you would invest 1,380 in SMA Solar Technology on October 30, 2024 and sell it today you would lose (16.00) from holding SMA Solar Technology or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. PT Astra International
Performance |
| Timeline |
| SMA Solar Technology |
| PT Astra International |
SMA Solar and PT Astra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and PT Astra
The main advantage of trading using opposite SMA Solar and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Alaska Air Group | SMA Solar vs. Pentair plc | SMA Solar vs. CITY OFFICE REIT | SMA Solar vs. CHINA SOUTHN AIR H |
| PT Astra vs. MAGNUM MINING EXP | PT Astra vs. PNC Financial Services | PT Astra vs. JSC Halyk bank | PT Astra vs. BANKINTER ADR 2007 |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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