Correlation Between Atlantic Sapphire and Astra Agro

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

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

Diversification Opportunities for Atlantic Sapphire and Astra Agro

-0.67

Correlation Coefficient

Atlantic Sapphire  Astra Agro

Excellent diversification

The 3 months correlation between Atlantic and Astra is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Sapphire ASA and Astra Agro Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Agro Lestari and Atlantic Sapphire 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 Atlantic Sapphire ASA are associated (or correlated) with Astra Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Agro Lestari has no effect on the direction of Atlantic Sapphire i.e., Atlantic Sapphire and Astra Agro go up and down completely randomly.

Pair Corralation between Atlantic Sapphire and Astra Agro

If you would invest  3.38  in Atlantic Sapphire ASA on September 15, 2024 and sell it today you would lose (2.46) from holding Atlantic Sapphire ASA or give up 72.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.62%
Values	Daily Returns

Atlantic Sapphire ASA  vs.  Astra Agro Lestari

Atlantic Sapphire ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Sapphire ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Atlantic Sapphire may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. In spite of fairly strong basic indicators, Astra Agro is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Atlantic Sapphire and Astra Agro

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

The idea behind Atlantic Sapphire ASA and Astra Agro Lestari 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 Transaction History module to view history of all your transactions and understand their impact on performance.