Correlation Between BlueScope Steel and PT Astra

Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and PT Astra 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 BlueScope Steel and PT Astra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlueScope Steel Limited and PT Astra International, you can compare the effects of market volatilities on BlueScope Steel and PT Astra 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 BlueScope Steel with a short position of PT Astra. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and PT Astra.

Diversification Opportunities for BlueScope Steel and PT Astra

-0.42

Correlation Coefficient

BlueScope Steel  PT Astra

Very good diversification

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

Pair Corralation between BlueScope Steel and PT Astra

Assuming the 90 days horizon BlueScope Steel Limited is expected to generate 0.59 times more return on investment than PT Astra. However, BlueScope Steel Limited is 1.7 times less risky than PT Astra. It trades about 0.21 of its potential returns per unit of risk. PT Astra International is currently generating about -0.12 per unit of risk. If you would invest  1,255  in BlueScope Steel Limited on December 4, 2024 and sell it today you would earn a total of  185.00  from holding BlueScope Steel Limited or generate 14.74% return on investment over 90 days.

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

BlueScope Steel Limited  vs.  PT Astra International

BlueScope Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlueScope Steel Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BlueScope Steel reported solid returns over the last few months and may actually be approaching a breakup point.

PT Astra International

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Astra International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BlueScope Steel and PT Astra

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

The idea behind BlueScope Steel Limited and PT Astra International 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.