Correlation Between Astra International and Leyand International

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

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

Diversification Opportunities for Astra International and Leyand International

-0.44

Correlation Coefficient

Astra International  Leyand International

Very good diversification

The 3 months correlation between Astra and Leyand is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Leyand International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leyand International Tbk and Astra International 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 International Tbk are associated (or correlated) with Leyand International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leyand International Tbk has no effect on the direction of Astra International i.e., Astra International and Leyand International go up and down completely randomly.

Pair Corralation between Astra International and Leyand International

Assuming the 90 days trading horizon Astra International is expected to generate 11.93 times less return on investment than Leyand International. But when comparing it to its historical volatility, Astra International Tbk is 3.38 times less risky than Leyand International. It trades about 0.01 of its potential returns per unit of risk. Leyand International Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,800  in Leyand International Tbk on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Leyand International Tbk or generate 5.56% return on investment over 90 days.

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

Astra International Tbk  vs.  Leyand International Tbk

Astra International Tbk

Risk-Adjusted Performance

Very Weak

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

Leyand International Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Leyand International Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Leyand International disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astra International and Leyand International

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

The idea behind Astra International Tbk and Leyand International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.