Correlation Between PT Astra and Handeni Gold

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

Diversification Opportunities for PT Astra and Handeni Gold

-0.92

Correlation Coefficient

PT Astra  Handeni Gold

Pay attention - limited upside

The 3 months correlation between PTAIF and Handeni is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Handeni Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handeni Gold 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 Handeni Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handeni Gold has no effect on the direction of PT Astra i.e., PT Astra and Handeni Gold go up and down completely randomly.

Pair Corralation between PT Astra and Handeni Gold

Assuming the 90 days horizon PT Astra is expected to generate 21.52 times less return on investment than Handeni Gold. But when comparing it to its historical volatility, PT Astra International is 3.34 times less risky than Handeni Gold. It trades about 0.01 of its potential returns per unit of risk. Handeni Gold is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Handeni Gold on September 30, 2024 and sell it today you would earn a total of  0.01  from holding Handeni Gold or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

PT Astra International  vs.  Handeni Gold

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Handeni Gold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Handeni Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Handeni Gold demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and Handeni Gold

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

The idea behind PT Astra International and Handeni Gold 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.