Correlation Between PT Astra and Vendetta Mining

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

Diversification Opportunities for PT Astra and Vendetta Mining

0.63

Correlation Coefficient

PT Astra  Vendetta Mining

Poor diversification

The 3 months correlation between PTAIF and Vendetta is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Vendetta Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vendetta Mining 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 Vendetta Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vendetta Mining Corp has no effect on the direction of PT Astra i.e., PT Astra and Vendetta Mining go up and down completely randomly.

Pair Corralation between PT Astra and Vendetta Mining

Assuming the 90 days horizon PT Astra is expected to generate 37.43 times less return on investment than Vendetta Mining. But when comparing it to its historical volatility, PT Astra International is 46.92 times less risky than Vendetta Mining. It trades about 0.16 of its potential returns per unit of risk. Vendetta Mining Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.12  in Vendetta Mining Corp on September 12, 2024 and sell it today you would earn a total of  0.69  from holding Vendetta Mining Corp or generate 575.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

PT Astra International  vs.  Vendetta Mining Corp

PT Astra International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 12 (%) 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.

Vendetta Mining Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vendetta Mining Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vendetta Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and Vendetta Mining

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

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