Correlation Between PT Astra and New Ulm

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

Diversification Opportunities for PT Astra and New Ulm

0.11

Correlation Coefficient

PT Astra  New Ulm

Average diversification

The 3 months correlation between PTAIF and New is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and New Ulm Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Ulm Telecom 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 New Ulm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Ulm Telecom has no effect on the direction of PT Astra i.e., PT Astra and New Ulm go up and down completely randomly.

Pair Corralation between PT Astra and New Ulm

Assuming the 90 days horizon PT Astra is expected to generate 1.34 times less return on investment than New Ulm. But when comparing it to its historical volatility, PT Astra International is 1.03 times less risky than New Ulm. It trades about 0.03 of its potential returns per unit of risk. New Ulm Telecom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,044  in New Ulm Telecom on December 27, 2024 and sell it today you would earn a total of  66.00  from holding New Ulm Telecom or generate 6.32% 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.  New Ulm Telecom

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.

New Ulm Telecom

Risk-Adjusted Performance

Insignificant

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

Pair Trading with PT Astra and New Ulm

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

The idea behind PT Astra International and New Ulm Telecom 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.