Correlation Between PT Astra and Colabor

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

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

Diversification Opportunities for PT Astra and Colabor

0.21

Correlation Coefficient

PT Astra  Colabor

Modest diversification

The 3 months correlation between ASII and Colabor is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Colabor Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colabor Group and PT Astra 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 PT Astra International are associated (or correlated) with Colabor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colabor Group has no effect on the direction of PT Astra i.e., PT Astra and Colabor go up and down completely randomly.

Pair Corralation between PT Astra and Colabor

Given the investment horizon of 90 days PT Astra International is expected to generate 6.87 times more return on investment than Colabor. However, PT Astra is 6.87 times more volatile than Colabor Group. It trades about 0.07 of its potential returns per unit of risk. Colabor Group is currently generating about -0.17 per unit of risk. If you would invest  0.09  in PT Astra International on September 2, 2024 and sell it today you would lose (0.03) from holding PT Astra International or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

PT Astra International  vs.  Colabor Group

PT Astra International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, PT Astra demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Colabor Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colabor Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PT Astra and Colabor

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

The idea behind PT Astra International and Colabor Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.