Correlation Between Aptiv PLC and PT Astra

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

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

Diversification Opportunities for Aptiv PLC and PT Astra

0.1

Correlation Coefficient

Aptiv PLC  PT Astra

Average diversification

The 3 months correlation between Aptiv and ASJA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC 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 Aptiv PLC 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 Aptiv PLC 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 Aptiv PLC i.e., Aptiv PLC and PT Astra go up and down completely randomly.

Pair Corralation between Aptiv PLC and PT Astra

Assuming the 90 days horizon Aptiv PLC is expected to generate 1.19 times less return on investment than PT Astra. But when comparing it to its historical volatility, Aptiv PLC is 3.17 times less risky than PT Astra. It trades about 0.14 of its potential returns per unit of risk. PT Astra International is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Aptiv PLC  vs.  PT Astra International

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Aptiv PLC and PT Astra

The main advantage of trading using opposite Aptiv PLC and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC 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 Aptiv PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.