Correlation Between PT Astra and KYB PORATION

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

Diversification Opportunities for PT Astra and KYB PORATION

0.2

Correlation Coefficient

PT Astra  KYB PORATION

Modest diversification

The 3 months correlation between ASJA and KYB is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and KYB PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYB PORATION 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 KYB PORATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYB PORATION has no effect on the direction of PT Astra i.e., PT Astra and KYB PORATION go up and down completely randomly.

Pair Corralation between PT Astra and KYB PORATION

Assuming the 90 days trading horizon PT Astra is expected to generate 1.94 times less return on investment than KYB PORATION. In addition to that, PT Astra is 4.47 times more volatile than KYB PORATION. It trades about 0.05 of its total potential returns per unit of risk. KYB PORATION is currently generating about 0.47 per unit of volatility. If you would invest  1,530  in KYB PORATION on September 23, 2024 and sell it today you would earn a total of  180.00  from holding KYB PORATION or generate 11.76% return on investment over 90 days.

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

PT Astra International  vs.  KYB PORATION

PT Astra International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, PT Astra is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KYB PORATION

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KYB PORATION are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KYB PORATION reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and KYB PORATION

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

The idea behind PT Astra International and KYB PORATION 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 Transaction History module to view history of all your transactions and understand their impact on performance.