Correlation Between EMPEROR ENT and PT Astra

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

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

Diversification Opportunities for EMPEROR ENT and PT Astra

-0.25

Correlation Coefficient

EMPEROR ENT  PT Astra

Very good diversification

The 3 months correlation between EMPEROR and ASJA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding EMPEROR ENT HOTEL 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 EMPEROR ENT 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 EMPEROR ENT HOTEL 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 EMPEROR ENT i.e., EMPEROR ENT and PT Astra go up and down completely randomly.

Pair Corralation between EMPEROR ENT and PT Astra

Assuming the 90 days trading horizon EMPEROR ENT HOTEL is expected to under-perform the PT Astra. But the stock apears to be less risky and, when comparing its historical volatility, EMPEROR ENT HOTEL is 3.87 times less risky than PT Astra. The stock trades about -0.28 of its potential returns per unit of risk. The PT Astra International is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  30.00  in PT Astra International on October 26, 2024 and sell it today you would lose (1.00) from holding PT Astra International or give up 3.33% of portfolio value over 90 days.

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

EMPEROR ENT HOTEL  vs.  PT Astra International

EMPEROR ENT HOTEL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMPEROR ENT HOTEL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PT Astra International

Risk-Adjusted Performance

1 of 100

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 fragile forward-looking indicators, PT Astra may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with EMPEROR ENT and PT Astra

The main advantage of trading using opposite EMPEROR ENT and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMPEROR ENT 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 EMPEROR ENT HOTEL 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.