Correlation Between PT Astra and Arlington Asset

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

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

Diversification Opportunities for PT Astra and Arlington Asset

0.85

Correlation Coefficient

PT Astra  Arlington Asset

Very poor diversification

The 3 months correlation between PTAIF and Arlington is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Arlington Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arlington Asset Inve and PT Astra 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 Astra International are associated (or correlated) with Arlington Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arlington Asset Inve has no effect on the direction of PT Astra i.e., PT Astra and Arlington Asset go up and down completely randomly.

Pair Corralation between PT Astra and Arlington Asset

Assuming the 90 days horizon PT Astra is expected to generate 1.54 times less return on investment than Arlington Asset. In addition to that, PT Astra is 1.66 times more volatile than Arlington Asset Investment. It trades about 0.04 of its total potential returns per unit of risk. Arlington Asset Investment is currently generating about 0.09 per unit of volatility. If you would invest  297.00  in Arlington Asset Investment on September 7, 2024 and sell it today you would earn a total of  172.00  from holding Arlington Asset Investment or generate 57.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	47.45%
Values	Daily Returns

PT Astra International  vs.  Arlington Asset Investment

PT Astra International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, PT Astra reported solid returns over the last few months and may actually be approaching a breakup point.

Arlington Asset Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arlington Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Arlington Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PT Astra and Arlington Asset

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

The idea behind PT Astra International and Arlington Asset Investment 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 Global Correlations module to find global opportunities by holding instruments from different markets.