Correlation Between Astra International and Terregra Asia

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

Diversification Opportunities for Astra International and Terregra Asia

-0.04

Correlation Coefficient

Astra International  Terregra Asia

Good diversification

The 3 months correlation between Astra and Terregra is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Terregra Asia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terregra Asia Energy 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 Terregra Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terregra Asia Energy has no effect on the direction of Astra International i.e., Astra International and Terregra Asia go up and down completely randomly.

Pair Corralation between Astra International and Terregra Asia

Assuming the 90 days trading horizon Astra International Tbk is expected to generate 0.39 times more return on investment than Terregra Asia. However, Astra International Tbk is 2.55 times less risky than Terregra Asia. It trades about 0.02 of its potential returns per unit of risk. Terregra Asia Energy is currently generating about -0.12 per unit of risk. If you would invest  497,700  in Astra International Tbk on September 16, 2024 and sell it today you would earn a total of  7,300  from holding Astra International Tbk or generate 1.47% return on investment over 90 days.

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

Astra International Tbk  vs.  Terregra Asia Energy

Astra International Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astra International Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Terregra Asia Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terregra Asia Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Astra International and Terregra Asia

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

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