Correlation Between PT Astra and DAIDO METAL

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

Diversification Opportunities for PT Astra and DAIDO METAL

0.22

Correlation Coefficient

PT Astra  DAIDO METAL

Modest diversification

The 3 months correlation between ASJA and DAIDO is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and DAIDO METAL TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIDO METAL TD 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 DAIDO METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIDO METAL TD has no effect on the direction of PT Astra i.e., PT Astra and DAIDO METAL go up and down completely randomly.

Pair Corralation between PT Astra and DAIDO METAL

Assuming the 90 days trading horizon PT Astra International is expected to generate 1.9 times more return on investment than DAIDO METAL. However, PT Astra is 1.9 times more volatile than DAIDO METAL TD. It trades about 0.04 of its potential returns per unit of risk. DAIDO METAL TD is currently generating about -0.02 per unit of risk. If you would invest  28.00  in PT Astra International on October 9, 2024 and sell it today you would earn a total of  3.00  from holding PT Astra International or generate 10.71% 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.  DAIDO METAL TD

PT Astra International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, PT Astra may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DAIDO METAL TD

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DAIDO METAL TD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DAIDO METAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Astra and DAIDO METAL

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

The idea behind PT Astra International and DAIDO METAL TD 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 Global Correlations module to find global opportunities by holding instruments from different markets.