Correlation Between Astra International and Tigaraksa Satria

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

Diversification Opportunities for Astra International and Tigaraksa Satria

0.06

Correlation Coefficient

Astra International  Tigaraksa Satria

Significant diversification

The 3 months correlation between Astra and Tigaraksa is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Tigaraksa Satria Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigaraksa Satria 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 Tigaraksa Satria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigaraksa Satria Tbk has no effect on the direction of Astra International i.e., Astra International and Tigaraksa Satria go up and down completely randomly.

Pair Corralation between Astra International and Tigaraksa Satria

Assuming the 90 days trading horizon Astra International Tbk is expected to generate 0.95 times more return on investment than Tigaraksa Satria. However, Astra International Tbk is 1.05 times less risky than Tigaraksa Satria. It trades about 0.06 of its potential returns per unit of risk. Tigaraksa Satria Tbk is currently generating about -0.02 per unit of risk. If you would invest  492,797  in Astra International Tbk on September 12, 2024 and sell it today you would earn a total of  27,203  from holding Astra International Tbk or generate 5.52% return on investment over 90 days.

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

Astra International Tbk  vs.  Tigaraksa Satria Tbk

Astra International Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Astra International Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Astra International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tigaraksa Satria Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Astra International Tbk and Tigaraksa Satria 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.