Correlation Between PT Astra and AMA Group

Can any of the company-specific risk be diversified away by investing in both PT Astra and AMA Group 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 AMA Group 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 AMA Group Limited, you can compare the effects of market volatilities on PT Astra and AMA Group 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 AMA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and AMA Group.

Diversification Opportunities for PT Astra and AMA Group

0.32

Correlation Coefficient

PT Astra  AMA Group

Weak diversification

The 3 months correlation between PTAIF and AMA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and AMA Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMA Group Limited 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 AMA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMA Group Limited has no effect on the direction of PT Astra i.e., PT Astra and AMA Group go up and down completely randomly.

Pair Corralation between PT Astra and AMA Group

Assuming the 90 days horizon PT Astra is expected to generate 115.71 times less return on investment than AMA Group. But when comparing it to its historical volatility, PT Astra International is 35.35 times less risky than AMA Group. It trades about 0.03 of its potential returns per unit of risk. AMA Group Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.57  in AMA Group Limited on December 28, 2024 and sell it today you would lose (0.77) from holding AMA Group Limited or give up 21.57% of portfolio value over 90 days.

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

PT Astra International  vs.  AMA Group Limited

PT Astra International

Risk-Adjusted Performance

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 weak forward indicators, PT Astra may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AMA Group Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMA Group Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AMA Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and AMA Group

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

The idea behind PT Astra International and AMA Group Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.