Correlation Between PT Astra and TPT Strategic

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

Diversification Opportunities for PT Astra and TPT Strategic

-0.56

Correlation Coefficient

PT Astra  TPT Strategic

Excellent diversification

The 3 months correlation between PTAIF and TPT is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and TPT Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPT Strategic 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 TPT Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPT Strategic has no effect on the direction of PT Astra i.e., PT Astra and TPT Strategic go up and down completely randomly.

Pair Corralation between PT Astra and TPT Strategic

Assuming the 90 days horizon PT Astra is expected to generate 19.68 times less return on investment than TPT Strategic. But when comparing it to its historical volatility, PT Astra International is 4.46 times less risky than TPT Strategic. It trades about 0.02 of its potential returns per unit of risk. TPT Strategic is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  296.00  in TPT Strategic on September 28, 2024 and sell it today you would earn a total of  648.00  from holding TPT Strategic or generate 218.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.64%
Values	Daily Returns

PT Astra International  vs.  TPT Strategic

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.

TPT Strategic

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TPT Strategic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, TPT Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and TPT Strategic

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

The idea behind PT Astra International and TPT Strategic 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.