Correlation Between PT Astra and BRP Old

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

Diversification Opportunities for PT Astra and BRP Old

0.0

Correlation Coefficient

PT Astra  BRP Old

Pay attention - limited upside

The 3 months correlation between PTAIF and BRP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and BRP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Old 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 BRP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Old has no effect on the direction of PT Astra i.e., PT Astra and BRP Old go up and down completely randomly.

Pair Corralation between PT Astra and BRP Old

If you would invest  30.00  in PT Astra International on December 19, 2024 and sell it today you would lose (1.00) from holding PT Astra International or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PT Astra International  vs.  BRP Old

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

BRP Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BRP Old is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PT Astra and BRP Old

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

The idea behind PT Astra International and BRP Old 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.