Correlation Between PT Astra and Oroco Resource

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

Diversification Opportunities for PT Astra and Oroco Resource

-0.22

Correlation Coefficient

PT Astra  Oroco Resource

Very good diversification

The 3 months correlation between PTAIF and Oroco is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Oroco Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oroco Resource Corp 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 Oroco Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oroco Resource Corp has no effect on the direction of PT Astra i.e., PT Astra and Oroco Resource go up and down completely randomly.

Pair Corralation between PT Astra and Oroco Resource

Assuming the 90 days horizon PT Astra is expected to generate 6.9 times less return on investment than Oroco Resource. But when comparing it to its historical volatility, PT Astra International is 1.63 times less risky than Oroco Resource. It trades about 0.03 of its potential returns per unit of risk. Oroco Resource Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Oroco Resource Corp on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Oroco Resource Corp or generate 52.63% return on investment over 90 days.

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

PT Astra International  vs.  Oroco Resource Corp

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 weak forward indicators, PT Astra may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Oroco Resource Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oroco Resource Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Oroco Resource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and Oroco Resource

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

The idea behind PT Astra International and Oroco Resource Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.