Correlation Between ITALIAN WINE and PT Astra

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

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

Diversification Opportunities for ITALIAN WINE and PT Astra

0.26

Correlation Coefficient

ITALIAN WINE  PT Astra

Modest diversification

The 3 months correlation between ITALIAN and ASJA is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS 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 ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and PT Astra go up and down completely randomly.

Pair Corralation between ITALIAN WINE and PT Astra

Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to under-perform the PT Astra. But the stock apears to be less risky and, when comparing its historical volatility, ITALIAN WINE BRANDS is 1.95 times less risky than PT Astra. The stock trades about -0.06 of its potential returns per unit of risk. The PT Astra International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  28.00  in PT Astra International on December 29, 2024 and sell it today you would lose (2.00) from holding PT Astra International or give up 7.14% of portfolio value over 90 days.

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

ITALIAN WINE BRANDS  vs.  PT Astra International

ITALIAN WINE BRANDS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITALIAN WINE BRANDS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PT Astra International

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Astra International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, PT Astra is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ITALIAN WINE and PT Astra

The main advantage of trading using opposite ITALIAN WINE and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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 ITALIAN WINE BRANDS 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..