Correlation Between PT Astra and Swedbank

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

Diversification Opportunities for PT Astra and Swedbank

0.38

Correlation Coefficient

PT Astra  Swedbank

Weak diversification

The 3 months correlation between PTAIF and Swedbank is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB 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 Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of PT Astra i.e., PT Astra and Swedbank go up and down completely randomly.

Pair Corralation between PT Astra and Swedbank

Assuming the 90 days horizon PT Astra is expected to generate 3.55 times less return on investment than Swedbank. In addition to that, PT Astra is 1.62 times more volatile than Swedbank AB. It trades about 0.03 of its total potential returns per unit of risk. Swedbank AB is currently generating about 0.2 per unit of volatility. If you would invest  1,810  in Swedbank AB on December 30, 2024 and sell it today you would earn a total of  529.00  from holding Swedbank AB or generate 29.23% return on investment over 90 days.

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

PT Astra International  vs.  Swedbank AB

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.

Swedbank AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Swedbank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and Swedbank

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

The idea behind PT Astra International and Swedbank AB 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.