Correlation Between PT Astra and TCL Electronics

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

Diversification Opportunities for PT Astra and TCL Electronics

-0.04

Correlation Coefficient

PT Astra  TCL Electronics

Good diversification

The 3 months correlation between PTAIF and TCL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and TCL Electronics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCL Electronics Holdings 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 TCL Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCL Electronics Holdings has no effect on the direction of PT Astra i.e., PT Astra and TCL Electronics go up and down completely randomly.

Pair Corralation between PT Astra and TCL Electronics

Assuming the 90 days horizon PT Astra is expected to generate 1.76 times less return on investment than TCL Electronics. In addition to that, PT Astra is 1.29 times more volatile than TCL Electronics Holdings. It trades about 0.08 of its total potential returns per unit of risk. TCL Electronics Holdings is currently generating about 0.19 per unit of volatility. If you would invest  81.00  in TCL Electronics Holdings on December 25, 2024 and sell it today you would earn a total of  23.00  from holding TCL Electronics Holdings or generate 28.4% return on investment over 90 days.

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

PT Astra International  vs.  TCL Electronics Holdings

PT Astra International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, PT Astra reported solid returns over the last few months and may actually be approaching a breakup point.

TCL Electronics Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TCL Electronics Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, TCL Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and TCL Electronics

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

The idea behind PT Astra International and TCL Electronics Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.