Correlation Between Astral Foods and PT Barito

Can any of the company-specific risk be diversified away by investing in both Astral Foods and PT Barito 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 Astral Foods and PT Barito into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astral Foods Limited and PT Barito Pacific, you can compare the effects of market volatilities on Astral Foods and PT Barito 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 Astral Foods with a short position of PT Barito. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and PT Barito.

Diversification Opportunities for Astral Foods and PT Barito

-0.25

Correlation Coefficient

Astral Foods  PT Barito

Very good diversification

The 3 months correlation between Astral and OB8 is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and PT Barito Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Barito Pacific and Astral Foods 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 Astral Foods Limited are associated (or correlated) with PT Barito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Barito Pacific has no effect on the direction of Astral Foods i.e., Astral Foods and PT Barito go up and down completely randomly.

Pair Corralation between Astral Foods and PT Barito

Assuming the 90 days trading horizon Astral Foods Limited is expected to under-perform the PT Barito. But the stock apears to be less risky and, when comparing its historical volatility, Astral Foods Limited is 2.25 times less risky than PT Barito. The stock trades about -0.19 of its potential returns per unit of risk. The PT Barito Pacific is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4.65  in PT Barito Pacific on October 10, 2024 and sell it today you would earn a total of  0.30  from holding PT Barito Pacific or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Astral Foods Limited  vs.  PT Barito Pacific

Astral Foods Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Astral Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PT Barito Pacific

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Barito Pacific are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PT Barito reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and PT Barito

The main advantage of trading using opposite Astral Foods and PT Barito positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, PT Barito 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 Barito will offset losses from the drop in PT Barito's long position.

The idea behind Astral Foods Limited and PT Barito Pacific pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.