Correlation Between ON SEMICONDUCTOR and PT Astra
Can any of the company-specific risk be diversified away by investing in both ON SEMICONDUCTOR 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 ON SEMICONDUCTOR and PT Astra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ON SEMICONDUCTOR and PT Astra International, you can compare the effects of market volatilities on ON SEMICONDUCTOR 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 ON SEMICONDUCTOR with a short position of PT Astra. Check out your portfolio center. Please also check ongoing floating volatility patterns of ON SEMICONDUCTOR and PT Astra.
Diversification Opportunities for ON SEMICONDUCTOR and PT Astra
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between XS4 and ASJA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and PT Astra go up and down completely randomly.
Pair Corralation between ON SEMICONDUCTOR and PT Astra
Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to generate 0.62 times more return on investment than PT Astra. However, ON SEMICONDUCTOR is 1.62 times less risky than PT Astra. It trades about 0.02 of its potential returns per unit of risk. PT Astra International is currently generating about 0.01 per unit of risk. If you would invest 6,199 in ON SEMICONDUCTOR on September 4, 2024 and sell it today you would earn a total of 518.00 from holding ON SEMICONDUCTOR or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
ON SEMICONDUCTOR vs. PT Astra International
Performance |
| Timeline |
| ON SEMICONDUCTOR |
| PT Astra International |
ON SEMICONDUCTOR and PT Astra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ON SEMICONDUCTOR and PT Astra
The main advantage of trading using opposite ON SEMICONDUCTOR and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON SEMICONDUCTOR 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.| ON SEMICONDUCTOR vs. TOTAL GABON | ON SEMICONDUCTOR vs. Walgreens Boots Alliance | ON SEMICONDUCTOR vs. Peak Resources Limited |
| PT Astra vs. SBI Insurance Group | PT Astra vs. Selective Insurance Group | PT Astra vs. NEWELL RUBBERMAID | PT Astra vs. APPLIED MATERIALS |
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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