Correlation Between PT Astra and Gentex

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

Diversification Opportunities for PT Astra and Gentex

-0.07

Correlation Coefficient

PT Astra  Gentex

Good diversification

The 3 months correlation between ASJA and Gentex is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of PT Astra i.e., PT Astra and Gentex go up and down completely randomly.

Pair Corralation between PT Astra and Gentex

Assuming the 90 days trading horizon PT Astra International is expected to generate 2.92 times more return on investment than Gentex. However, PT Astra is 2.92 times more volatile than Gentex. It trades about 0.07 of its potential returns per unit of risk. Gentex is currently generating about -0.06 per unit of risk. If you would invest  23.00  in PT Astra International on September 23, 2024 and sell it today you would earn a total of  7.00  from holding PT Astra International or generate 30.43% 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.  Gentex

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.

Gentex

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gentex is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Astra and Gentex

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

The idea behind PT Astra International and Gentex 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.