Correlation Between Astra International and Computershare

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

Diversification Opportunities for Astra International and Computershare

-0.65

Correlation Coefficient

Astra International  Computershare

Excellent diversification

The 3 months correlation between Astra and Computershare is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Computershare Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare ADR 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 Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare ADR has no effect on the direction of Astra International i.e., Astra International and Computershare go up and down completely randomly.

Pair Corralation between Astra International and Computershare

Assuming the 90 days horizon Astra International Tbk is expected to under-perform the Computershare. In addition to that, Astra International is 1.17 times more volatile than Computershare Ltd ADR. It trades about -0.02 of its total potential returns per unit of risk. Computershare Ltd ADR is currently generating about 0.21 per unit of volatility. If you would invest  1,727  in Computershare Ltd ADR on October 26, 2024 and sell it today you would earn a total of  432.00  from holding Computershare Ltd ADR or generate 25.01% return on investment over 90 days.

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

Astra International Tbk  vs.  Computershare Ltd ADR

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 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.

Computershare ADR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Ltd ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Computershare showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astra International and Computershare

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

The idea behind Astra International Tbk and Computershare Ltd ADR 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.