Correlation Between Astra Agro and Sariguna Primatirta

Can any of the company-specific risk be diversified away by investing in both Astra Agro and Sariguna Primatirta 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 Agro and Sariguna Primatirta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astra Agro Lestari and Sariguna Primatirta PT, you can compare the effects of market volatilities on Astra Agro and Sariguna Primatirta 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 Agro with a short position of Sariguna Primatirta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Agro and Sariguna Primatirta.

Diversification Opportunities for Astra Agro and Sariguna Primatirta

-0.42

Correlation Coefficient

Astra Agro  Sariguna Primatirta

Very good diversification

The 3 months correlation between Astra and Sariguna is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Astra Agro Lestari and Sariguna Primatirta PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sariguna Primatirta and Astra Agro 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 Agro Lestari are associated (or correlated) with Sariguna Primatirta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sariguna Primatirta has no effect on the direction of Astra Agro i.e., Astra Agro and Sariguna Primatirta go up and down completely randomly.

Pair Corralation between Astra Agro and Sariguna Primatirta

Assuming the 90 days trading horizon Astra Agro Lestari is expected to under-perform the Sariguna Primatirta. But the stock apears to be less risky and, when comparing its historical volatility, Astra Agro Lestari is 1.63 times less risky than Sariguna Primatirta. The stock trades about -0.05 of its potential returns per unit of risk. The Sariguna Primatirta PT is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  135,000  in Sariguna Primatirta PT on October 9, 2024 and sell it today you would earn a total of  11,500  from holding Sariguna Primatirta PT or generate 8.52% return on investment over 90 days.

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

Astra Agro Lestari  vs.  Sariguna Primatirta PT

Astra Agro Lestari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Agro Lestari has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Sariguna Primatirta

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sariguna Primatirta PT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sariguna Primatirta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astra Agro and Sariguna Primatirta

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

The idea behind Astra Agro Lestari and Sariguna Primatirta PT 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.