Correlation Between PT Astra and First Robinson

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

Diversification Opportunities for PT Astra and First Robinson

0.07

Correlation Coefficient

PT Astra  First Robinson

Significant diversification

The 3 months correlation between PTAIF and First is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and First Robinson Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Robinson Financial 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 Robinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Robinson Financial has no effect on the direction of PT Astra i.e., PT Astra and First Robinson go up and down completely randomly.

Pair Corralation between PT Astra and First Robinson

Assuming the 90 days horizon PT Astra International is expected to generate 1.72 times more return on investment than First Robinson. However, PT Astra is 1.72 times more volatile than First Robinson Financial. It trades about 0.0 of its potential returns per unit of risk. First Robinson Financial is currently generating about -0.01 per unit of risk. 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	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

PT Astra International  vs.  First Robinson Financial

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.

First Robinson Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Robinson Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, First Robinson is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PT Astra and First Robinson

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

The idea behind PT Astra International and First Robinson Financial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.