Correlation Between PT Astra and E3 LITHIUM

Can any of the company-specific risk be diversified away by investing in both PT Astra and E3 LITHIUM 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 E3 LITHIUM 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 E3 LITHIUM LTD, you can compare the effects of market volatilities on PT Astra and E3 LITHIUM 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 E3 LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and E3 LITHIUM.

Diversification Opportunities for PT Astra and E3 LITHIUM

-0.03

Correlation Coefficient

PT Astra  E3 LITHIUM

Good diversification

The 3 months correlation between ASJA and OW3 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and E3 LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 LITHIUM LTD 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 E3 LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 LITHIUM LTD has no effect on the direction of PT Astra i.e., PT Astra and E3 LITHIUM go up and down completely randomly.

Pair Corralation between PT Astra and E3 LITHIUM

Assuming the 90 days trading horizon PT Astra International is expected to generate 0.94 times more return on investment than E3 LITHIUM. However, PT Astra International is 1.07 times less risky than E3 LITHIUM. It trades about 0.02 of its potential returns per unit of risk. E3 LITHIUM LTD is currently generating about 0.0 per unit of risk. If you would invest  34.00  in PT Astra International on October 11, 2024 and sell it today you would lose (5.00) from holding PT Astra International or give up 14.71% of portfolio value over 90 days.

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

PT Astra International  vs.  E3 LITHIUM LTD

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.

E3 LITHIUM LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E3 LITHIUM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, E3 LITHIUM 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 E3 LITHIUM

The main advantage of trading using opposite PT Astra and E3 LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, E3 LITHIUM 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 E3 LITHIUM will offset losses from the drop in E3 LITHIUM's long position.

The idea behind PT Astra International and E3 LITHIUM LTD 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.