Correlation Between Delta Dunia and Astra Otoparts

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

By analyzing existing cross correlation between Delta Dunia Makmur and Astra Otoparts Tbk, you can compare the effects of market volatilities on Delta Dunia and Astra Otoparts 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 Delta Dunia with a short position of Astra Otoparts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Dunia and Astra Otoparts.

Diversification Opportunities for Delta Dunia and Astra Otoparts

-0.46

Correlation Coefficient

Delta Dunia  Astra Otoparts

Very good diversification

The 3 months correlation between Delta and Astra is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Delta Dunia Makmur and Astra Otoparts Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Otoparts Tbk and Delta Dunia 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 Delta Dunia Makmur are associated (or correlated) with Astra Otoparts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Otoparts Tbk has no effect on the direction of Delta Dunia i.e., Delta Dunia and Astra Otoparts go up and down completely randomly.

Pair Corralation between Delta Dunia and Astra Otoparts

Assuming the 90 days trading horizon Delta Dunia Makmur is expected to generate 1.29 times more return on investment than Astra Otoparts. However, Delta Dunia is 1.29 times more volatile than Astra Otoparts Tbk. It trades about 0.11 of its potential returns per unit of risk. Astra Otoparts Tbk is currently generating about 0.02 per unit of risk. If you would invest  34,150  in Delta Dunia Makmur on September 4, 2024 and sell it today you would earn a total of  32,350  from holding Delta Dunia Makmur or generate 94.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.57%
Values	Daily Returns

Delta Dunia Makmur  vs.  Astra Otoparts Tbk

Delta Dunia Makmur

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta Dunia Makmur has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delta Dunia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Astra Otoparts Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astra Otoparts Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Astra Otoparts is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Delta Dunia and Astra Otoparts

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

The idea behind Delta Dunia Makmur and Astra Otoparts Tbk 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.