Correlation Between PT Astra and Network 1

Can any of the company-specific risk be diversified away by investing in both PT Astra and Network 1 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 Network 1 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 Network 1 Technologies, you can compare the effects of market volatilities on PT Astra and Network 1 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 Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Astra and Network 1.

Diversification Opportunities for PT Astra and Network 1

-0.44

Correlation Coefficient

PT Astra  Network 1

Very good diversification

The 3 months correlation between PTAIF and Network is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies 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 Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of PT Astra i.e., PT Astra and Network 1 go up and down completely randomly.

Pair Corralation between PT Astra and Network 1

Assuming the 90 days horizon PT Astra International is expected to generate 1.19 times more return on investment than Network 1. However, PT Astra is 1.19 times more volatile than Network 1 Technologies. It trades about -0.01 of its potential returns per unit of risk. Network 1 Technologies is currently generating about -0.04 per unit of risk. If you would invest  31.00  in PT Astra International on October 9, 2024 and sell it today you would lose (4.00) from holding PT Astra International or give up 12.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	72.47%
Values	Daily Returns

PT Astra International  vs.  Network 1 Technologies

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

Network 1 Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Network 1 Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Network 1 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Astra and Network 1

The main advantage of trading using opposite PT Astra and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Astra position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.

The idea behind PT Astra International and Network 1 Technologies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.