Correlation Between Astra Agro and Tunas Baru

Can any of the company-specific risk be diversified away by investing in both Astra Agro and Tunas Baru 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 Tunas Baru 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 Tunas Baru Lampung, you can compare the effects of market volatilities on Astra Agro and Tunas Baru 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 Tunas Baru. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Agro and Tunas Baru.

Diversification Opportunities for Astra Agro and Tunas Baru

0.8

Correlation Coefficient

Astra Agro  Tunas Baru

Very poor diversification

The 3 months correlation between Astra and Tunas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Astra Agro Lestari and Tunas Baru Lampung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tunas Baru Lampung 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 Tunas Baru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tunas Baru Lampung has no effect on the direction of Astra Agro i.e., Astra Agro and Tunas Baru go up and down completely randomly.

Pair Corralation between Astra Agro and Tunas Baru

Assuming the 90 days trading horizon Astra Agro Lestari is expected to under-perform the Tunas Baru. But the stock apears to be less risky and, when comparing its historical volatility, Astra Agro Lestari is 1.25 times less risky than Tunas Baru. The stock trades about -0.03 of its potential returns per unit of risk. The Tunas Baru Lampung is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  60,271  in Tunas Baru Lampung on October 25, 2024 and sell it today you would earn a total of  1,229  from holding Tunas Baru Lampung or generate 2.04% return on investment over 90 days.

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

Astra Agro Lestari  vs.  Tunas Baru Lampung

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tunas Baru Lampung

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tunas Baru Lampung 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.

Pair Trading with Astra Agro and Tunas Baru

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

The idea behind Astra Agro Lestari and Tunas Baru Lampung 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.