Correlation Between Astra Graphia and Asiaplast Industries

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

By analyzing existing cross correlation between Astra Graphia Tbk and Asiaplast Industries Tbk, you can compare the effects of market volatilities on Astra Graphia and Asiaplast Industries 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 Graphia with a short position of Asiaplast Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Graphia and Asiaplast Industries.

Diversification Opportunities for Astra Graphia and Asiaplast Industries

0.41

Correlation Coefficient

Astra Graphia  Asiaplast Industries

Very weak diversification

The 3 months correlation between Astra and Asiaplast is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Astra Graphia Tbk and Asiaplast Industries Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiaplast Industries Tbk and Astra Graphia 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 Graphia Tbk are associated (or correlated) with Asiaplast Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiaplast Industries Tbk has no effect on the direction of Astra Graphia i.e., Astra Graphia and Asiaplast Industries go up and down completely randomly.

Pair Corralation between Astra Graphia and Asiaplast Industries

Assuming the 90 days trading horizon Astra Graphia Tbk is expected to under-perform the Asiaplast Industries. But the stock apears to be less risky and, when comparing its historical volatility, Astra Graphia Tbk is 2.45 times less risky than Asiaplast Industries. The stock trades about -0.07 of its potential returns per unit of risk. The Asiaplast Industries Tbk is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  55,000  in Asiaplast Industries Tbk on December 1, 2024 and sell it today you would lose (4,000) from holding Asiaplast Industries Tbk or give up 7.27% of portfolio value over 90 days.

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

Astra Graphia Tbk  vs.  Asiaplast Industries Tbk

Astra Graphia Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astra Graphia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Astra Graphia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asiaplast Industries Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asiaplast Industries Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asiaplast Industries is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Astra Graphia and Asiaplast Industries

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

The idea behind Astra Graphia Tbk and Asiaplast Industries Tbk 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.