Correlation Between Kino Indonesia and Astra Agro

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

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

Diversification Opportunities for Kino Indonesia and Astra Agro

0.44

Correlation Coefficient

Kino Indonesia  Astra Agro

Very weak diversification

The 3 months correlation between Kino and Astra is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kino Indonesia Tbk and Astra Agro Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Agro Lestari and Kino 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 Kino Indonesia Tbk are associated (or correlated) with Astra Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Agro Lestari has no effect on the direction of Kino Indonesia i.e., Kino Indonesia and Astra Agro go up and down completely randomly.

Pair Corralation between Kino Indonesia and Astra Agro

Assuming the 90 days trading horizon Kino Indonesia Tbk is expected to under-perform the Astra Agro. In addition to that, Kino Indonesia is 1.06 times more volatile than Astra Agro Lestari. It trades about -0.05 of its total potential returns per unit of risk. Astra Agro Lestari is currently generating about -0.03 per unit of volatility. If you would invest  582,500  in Astra Agro Lestari on December 21, 2024 and sell it today you would lose (22,500) from holding Astra Agro Lestari or give up 3.86% of portfolio value over 90 days.

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

Kino Indonesia Tbk  vs.  Astra Agro Lestari

Kino Indonesia Tbk

Risk-Adjusted Performance

Very Weak

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

Astra Agro Lestari

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Kino Indonesia Tbk and Astra Agro Lestari 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.