Correlation Between KB Financial and PT Astra

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

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

Diversification Opportunities for KB Financial and PT Astra

-0.35

Correlation Coefficient

KB Financial  PT Astra

Very good diversification

The 3 months correlation between KBIA and ASJA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group 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 KB Financial 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 KB Financial Group 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 KB Financial i.e., KB Financial and PT Astra go up and down completely randomly.

Pair Corralation between KB Financial and PT Astra

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the PT Astra. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.34 times less risky than PT Astra. The stock trades about -0.11 of its potential returns per unit of risk. The PT Astra International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  28.00  in PT Astra International on September 14, 2024 and sell it today you would earn a total of  2.00  from holding PT Astra International or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

KB Financial Group  vs.  PT Astra International

KB Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, KB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Astra International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 2 (%) 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 January 2025.

Pair Trading with KB Financial and PT Astra

The main advantage of trading using opposite KB Financial and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial 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 KB Financial Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.