Correlation Between PT Indonesia and Astra Graphia

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

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

Diversification Opportunities for PT Indonesia and Astra Graphia

0.16

Correlation Coefficient

PT Indonesia  Astra Graphia

Average diversification

The 3 months correlation between IPCC and Astra is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan and Astra Graphia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Graphia Tbk and PT Indonesia 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 PT Indonesia Kendaraan are associated (or correlated) with Astra Graphia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Graphia Tbk has no effect on the direction of PT Indonesia i.e., PT Indonesia and Astra Graphia go up and down completely randomly.

Pair Corralation between PT Indonesia and Astra Graphia

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to generate 1.08 times more return on investment than Astra Graphia. However, PT Indonesia is 1.08 times more volatile than Astra Graphia Tbk. It trades about 0.05 of its potential returns per unit of risk. Astra Graphia Tbk is currently generating about 0.01 per unit of risk. If you would invest  62,663  in PT Indonesia Kendaraan on October 7, 2024 and sell it today you would earn a total of  7,837  from holding PT Indonesia Kendaraan or generate 12.51% return on investment over 90 days.

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

PT Indonesia Kendaraan  vs.  Astra Graphia Tbk

PT Indonesia Kendaraan

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indonesia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Astra Graphia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Graphia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Astra Graphia 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 PT Indonesia and Astra Graphia

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

The idea behind PT Indonesia Kendaraan and Astra Graphia 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.