Correlation Between Astra Graphia and Indo Kordsa

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

Diversification Opportunities for Astra Graphia and Indo Kordsa

0.08

Correlation Coefficient

Astra Graphia  Indo Kordsa

Significant diversification

The 3 months correlation between Astra and Indo is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Astra Graphia Tbk and Indo Kordsa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Kordsa 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 Indo Kordsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Kordsa Tbk has no effect on the direction of Astra Graphia i.e., Astra Graphia and Indo Kordsa go up and down completely randomly.

Pair Corralation between Astra Graphia and Indo Kordsa

Assuming the 90 days trading horizon Astra Graphia is expected to generate 37.26 times less return on investment than Indo Kordsa. But when comparing it to its historical volatility, Astra Graphia Tbk is 2.18 times less risky than Indo Kordsa. It trades about 0.0 of its potential returns per unit of risk. Indo Kordsa Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  572,500  in Indo Kordsa Tbk on October 25, 2024 and sell it today you would earn a total of  12,500  from holding Indo Kordsa Tbk or generate 2.18% return on investment over 90 days.

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

Astra Graphia Tbk  vs.  Indo Kordsa Tbk

Astra Graphia Tbk

Risk-Adjusted Performance

0 of 100

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.

Indo Kordsa Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Kordsa Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Indo Kordsa 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 Indo Kordsa

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

The idea behind Astra Graphia Tbk and Indo Kordsa 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.