Correlation Between Archer Daniels and Astra Agro

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

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

Diversification Opportunities for Archer Daniels and Astra Agro

0.0

Correlation Coefficient

Archer Daniels  Astra Agro

Pay attention - limited upside

The 3 months correlation between Archer and Astra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland 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 Archer Daniels 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 Archer Daniels Midland 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 Archer Daniels i.e., Archer Daniels and Astra Agro go up and down completely randomly.

Pair Corralation between Archer Daniels and Astra Agro

If you would invest (100.00) in Astra Agro Lestari on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Astra Agro Lestari or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Archer Daniels Midland  vs.  Astra Agro Lestari

Archer Daniels Midland

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Archer Daniels is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Astra Agro Lestari

Risk-Adjusted Performance

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 Archer Daniels and Astra Agro

The main advantage of trading using opposite Archer Daniels and Astra Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels 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 Archer Daniels Midland 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.