Correlation Between PT Astra and 1st Capital

Can any of the company-specific risk be diversified away by investing in both PT Astra and 1st Capital 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 1st Capital 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 1st Capital Bank, you can compare the effects of market volatilities on PT Astra and 1st Capital 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 1st Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and 1st Capital.

Diversification Opportunities for PT Astra and 1st Capital

0.0

Correlation Coefficient

PT Astra  1st Capital

Pay attention - limited upside

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

Pair Corralation between PT Astra and 1st Capital

If you would invest  27.00  in PT Astra International on December 27, 2024 and sell it today you would earn a total of  1.00  from holding PT Astra International or generate 3.7% return on investment over 90 days.

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

PT Astra International  vs.  1st Capital Bank

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

1st Capital Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days 1st Capital Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 1st Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PT Astra and 1st Capital

The main advantage of trading using opposite PT Astra and 1st Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, 1st Capital 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 1st Capital will offset losses from the drop in 1st Capital's long position.

The idea behind PT Astra International and 1st Capital Bank 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.