Correlation Between PT Astra and Dno ASA

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

Diversification Opportunities for PT Astra and Dno ASA

-0.12

Correlation Coefficient

PT Astra  Dno ASA

Good diversification

The 3 months correlation between ASJA and Dno is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA 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 Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of PT Astra i.e., PT Astra and Dno ASA go up and down completely randomly.

Pair Corralation between PT Astra and Dno ASA

Assuming the 90 days trading horizon PT Astra International is expected to generate 2.87 times more return on investment than Dno ASA. However, PT Astra is 2.87 times more volatile than Dno ASA. It trades about 0.05 of its potential returns per unit of risk. Dno ASA is currently generating about -0.25 per unit of risk. If you would invest  29.00  in PT Astra International on September 23, 2024 and sell it today you would earn a total of  1.00  from holding PT Astra International or generate 3.45% return on investment over 90 days.

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

PT Astra International  vs.  Dno ASA

PT Astra International

Risk-Adjusted Performance

1 of 100

Very 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.

Dno ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dno ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dno ASA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Astra and Dno ASA

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

The idea behind PT Astra International and Dno ASA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.