Correlation Between PT Astra and China Everbright

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

Diversification Opportunities for PT Astra and China Everbright

-0.67

Correlation Coefficient

PT Astra  China Everbright

Excellent diversification

The 3 months correlation between PTAIF and China is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and China Everbright Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright 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 China Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright has no effect on the direction of PT Astra i.e., PT Astra and China Everbright go up and down completely randomly.

Pair Corralation between PT Astra and China Everbright

If you would invest  418.00  in China Everbright Ltd on October 26, 2024 and sell it today you would earn a total of  226.00  from holding China Everbright Ltd or generate 54.07% return on investment over 90 days.

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

PT Astra International  vs.  China Everbright Ltd

PT Astra International

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

China Everbright

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Everbright Ltd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, China Everbright showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and China Everbright

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

The idea behind PT Astra International and China Everbright Ltd 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.