Correlation Between Arsenal Digital and PT Astra

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

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

Diversification Opportunities for Arsenal Digital and PT Astra

0.09

Correlation Coefficient

Arsenal Digital  PT Astra

Significant diversification

The 3 months correlation between Arsenal and ASII is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Arsenal Digital Holdings 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 Arsenal Digital 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 Arsenal Digital Holdings 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 Arsenal Digital i.e., Arsenal Digital and PT Astra go up and down completely randomly.

Pair Corralation between Arsenal Digital and PT Astra

Given the investment horizon of 90 days Arsenal Digital is expected to generate 1.05 times less return on investment than PT Astra. In addition to that, Arsenal Digital is 1.0 times more volatile than PT Astra International. It trades about 0.09 of its total potential returns per unit of risk. PT Astra International is currently generating about 0.09 per unit of volatility. If you would invest  0.13  in PT Astra International on September 12, 2024 and sell it today you would lose (0.07) from holding PT Astra International or give up 53.85% of portfolio value over 90 days.

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

Arsenal Digital Holdings  vs.  PT Astra International

Arsenal Digital Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arsenal Digital Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Arsenal Digital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

PT Astra International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, PT Astra demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arsenal Digital and PT Astra

The main advantage of trading using opposite Arsenal Digital and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arsenal Digital 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.

The idea behind Arsenal Digital Holdings and PT Astra International 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.