Correlation Between PT Astra and Kingspan Group

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

Diversification Opportunities for PT Astra and Kingspan Group

0.14

Correlation Coefficient

PT Astra  Kingspan Group

Average diversification

The 3 months correlation between PTAIF and Kingspan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Kingspan Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group PLC 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 Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group PLC has no effect on the direction of PT Astra i.e., PT Astra and Kingspan Group go up and down completely randomly.

Pair Corralation between PT Astra and Kingspan Group

Assuming the 90 days horizon PT Astra is expected to generate 2.02 times less return on investment than Kingspan Group. In addition to that, PT Astra is 1.3 times more volatile than Kingspan Group PLC. It trades about 0.03 of its total potential returns per unit of risk. Kingspan Group PLC is currently generating about 0.09 per unit of volatility. If you would invest  7,275  in Kingspan Group PLC on December 29, 2024 and sell it today you would earn a total of  1,021  from holding Kingspan Group PLC or generate 14.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PT Astra International  vs.  Kingspan Group PLC

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.

Kingspan Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingspan Group PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kingspan Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and Kingspan Group

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

The idea behind PT Astra International and Kingspan Group PLC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.