Correlation Between Astra International and China Everbright

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

Diversification Opportunities for Astra International and China Everbright

-0.41

Correlation Coefficient

Astra International  China Everbright

Very good diversification

The 3 months correlation between Astra and China is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and China Everbright Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright Env 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 China Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright Env has no effect on the direction of Astra International i.e., Astra International and China Everbright go up and down completely randomly.

Pair Corralation between Astra International and China Everbright

If you would invest  39.00  in China Everbright Environment on September 25, 2024 and sell it today you would earn a total of  0.00  from holding China Everbright Environment or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Astra International Tbk  vs.  China Everbright Environment

Astra International Tbk

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

China Everbright Env

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Everbright Environment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, China Everbright is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Astra International and China Everbright

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

The idea behind Astra International Tbk and China Everbright Environment 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.