Correlation Between Andalan Sakti and Agro Yasa

Can any of the company-specific risk be diversified away by investing in both Andalan Sakti and Agro Yasa 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 Andalan Sakti and Agro Yasa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andalan Sakti Primaindo and Agro Yasa Lestari, you can compare the effects of market volatilities on Andalan Sakti and Agro Yasa 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 Andalan Sakti with a short position of Agro Yasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andalan Sakti and Agro Yasa.

Diversification Opportunities for Andalan Sakti and Agro Yasa

-0.42

Correlation Coefficient

Andalan Sakti  Agro Yasa

Very good diversification

The 3 months correlation between Andalan and Agro is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Andalan Sakti Primaindo and Agro Yasa Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Yasa Lestari and Andalan Sakti 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 Andalan Sakti Primaindo are associated (or correlated) with Agro Yasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Yasa Lestari has no effect on the direction of Andalan Sakti i.e., Andalan Sakti and Agro Yasa go up and down completely randomly.

Pair Corralation between Andalan Sakti and Agro Yasa

Assuming the 90 days trading horizon Andalan Sakti Primaindo is expected to generate 1.48 times more return on investment than Agro Yasa. However, Andalan Sakti is 1.48 times more volatile than Agro Yasa Lestari. It trades about 0.1 of its potential returns per unit of risk. Agro Yasa Lestari is currently generating about -0.19 per unit of risk. If you would invest  13,200  in Andalan Sakti Primaindo on December 30, 2024 and sell it today you would earn a total of  4,600  from holding Andalan Sakti Primaindo or generate 34.85% return on investment over 90 days.

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

Andalan Sakti Primaindo  vs.  Agro Yasa Lestari

Andalan Sakti Primaindo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Andalan Sakti Primaindo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Andalan Sakti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Agro Yasa Lestari

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agro Yasa Lestari has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Andalan Sakti and Agro Yasa

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

The idea behind Andalan Sakti Primaindo and Agro Yasa Lestari 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.