Correlation Between Astra International and Brembo SpA

Can any of the company-specific risk be diversified away by investing in both Astra International and Brembo SpA 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 Astra International and Brembo SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astra International Tbk and Brembo SpA, you can compare the effects of market volatilities on Astra International and Brembo SpA 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 Astra International with a short position of Brembo SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra International and Brembo SpA.

Diversification Opportunities for Astra International and Brembo SpA

-0.28

Correlation Coefficient

Astra International  Brembo SpA

Very good diversification

The 3 months correlation between Astra and Brembo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Brembo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brembo SpA and Astra International 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 Astra International Tbk are associated (or correlated) with Brembo SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brembo SpA has no effect on the direction of Astra International i.e., Astra International and Brembo SpA go up and down completely randomly.

Pair Corralation between Astra International and Brembo SpA

Assuming the 90 days horizon Astra International Tbk is expected to under-perform the Brembo SpA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Astra International Tbk is 1.16 times less risky than Brembo SpA. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Brembo SpA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  901.00  in Brembo SpA on December 26, 2024 and sell it today you would earn a total of  21.00  from holding Brembo SpA or generate 2.33% return on investment over 90 days.

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

Astra International Tbk  vs.  Brembo SpA

Astra International Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astra International Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Astra International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Brembo SpA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brembo SpA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Brembo SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Astra International and Brembo SpA

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

The idea behind Astra International Tbk and Brembo SpA 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.