Correlation Between PT Astra and Mentor Capital

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

Diversification Opportunities for PT Astra and Mentor Capital

-0.43

Correlation Coefficient

PT Astra  Mentor Capital

Very good diversification

The 3 months correlation between PTAIF and Mentor is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Mentor Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mentor Capital 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 Mentor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mentor Capital has no effect on the direction of PT Astra i.e., PT Astra and Mentor Capital go up and down completely randomly.

Pair Corralation between PT Astra and Mentor Capital

Assuming the 90 days horizon PT Astra is expected to generate 22.18 times less return on investment than Mentor Capital. But when comparing it to its historical volatility, PT Astra International is 2.16 times less risky than Mentor Capital. It trades about 0.0 of its potential returns per unit of risk. Mentor Capital is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Mentor Capital on December 11, 2024 and sell it today you would lose (0.50) from holding Mentor Capital or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.14%
Values	Daily Returns

PT Astra International  vs.  Mentor Capital

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Mentor Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mentor Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Mentor Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PT Astra and Mentor Capital

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

The idea behind PT Astra International and Mentor Capital 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.