Correlation Between PT Astra and Atico Mining

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

Diversification Opportunities for PT Astra and Atico Mining

0.11

Correlation Coefficient

PT Astra  Atico Mining

Average diversification

The 3 months correlation between PTAIF and Atico is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Atico Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atico Mining 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 Atico Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atico Mining has no effect on the direction of PT Astra i.e., PT Astra and Atico Mining go up and down completely randomly.

Pair Corralation between PT Astra and Atico Mining

Assuming the 90 days horizon PT Astra is expected to generate 25.79 times less return on investment than Atico Mining. But when comparing it to its historical volatility, PT Astra International is 1.76 times less risky than Atico Mining. It trades about 0.0 of its potential returns per unit of risk. Atico Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Atico Mining on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Atico Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.67%
Values	Daily Returns

PT Astra International  vs.  Atico Mining

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 indicators, PT Astra is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Atico Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atico Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Atico Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and Atico Mining

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

The idea behind PT Astra International and Atico Mining 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.