Correlation Between PT Astra and First National

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

Diversification Opportunities for PT Astra and First National

0.51

Correlation Coefficient

PT Astra  First National

Very weak diversification

The 3 months correlation between PTAIF and First is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and First National Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Energy 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Energy has no effect on the direction of PT Astra i.e., PT Astra and First National go up and down completely randomly.

Pair Corralation between PT Astra and First National

Assuming the 90 days horizon PT Astra International is expected to generate 0.22 times more return on investment than First National. However, PT Astra International is 4.6 times less risky than First National. It trades about 0.03 of its potential returns per unit of risk. First National Energy is currently generating about -0.01 per unit of risk. If you would invest  27.00  in PT Astra International on December 28, 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	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

PT Astra International  vs.  First National Energy

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.

First National Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days First National Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with PT Astra and First National

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

The idea behind PT Astra International and First National Energy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.