Correlation Between Harum Energy and Astra Otoparts

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

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

Diversification Opportunities for Harum Energy and Astra Otoparts

0.81

Correlation Coefficient

Harum Energy  Astra Otoparts

Very poor diversification

The 3 months correlation between Harum and Astra is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Harum Energy Tbk 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 Harum Energy 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 Harum Energy Tbk 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 Harum Energy i.e., Harum Energy and Astra Otoparts go up and down completely randomly.

Pair Corralation between Harum Energy and Astra Otoparts

Assuming the 90 days trading horizon Harum Energy Tbk is expected to under-perform the Astra Otoparts. In addition to that, Harum Energy is 1.68 times more volatile than Astra Otoparts Tbk. It trades about -0.25 of its total potential returns per unit of risk. Astra Otoparts Tbk is currently generating about -0.16 per unit of volatility. If you would invest  230,000  in Astra Otoparts Tbk on December 30, 2024 and sell it today you would lose (32,500) from holding Astra Otoparts Tbk or give up 14.13% of portfolio value over 90 days.

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

Harum Energy Tbk  vs.  Astra Otoparts Tbk

Harum Energy Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harum Energy Tbk 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.

Astra Otoparts Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astra Otoparts Tbk 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 Harum Energy and Astra Otoparts

The main advantage of trading using opposite Harum Energy and Astra Otoparts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harum Energy 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 Harum Energy Tbk 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.