Correlation Between Astra International and LiveChat Software

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

Diversification Opportunities for Astra International and LiveChat Software

0.69

Correlation Coefficient

Astra International  LiveChat Software

Poor diversification

The 3 months correlation between Astra and LiveChat is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and LiveChat Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveChat Software 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 LiveChat Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveChat Software has no effect on the direction of Astra International i.e., Astra International and LiveChat Software go up and down completely randomly.

Pair Corralation between Astra International and LiveChat Software

Assuming the 90 days horizon Astra International Tbk is expected to generate 0.7 times more return on investment than LiveChat Software. However, Astra International Tbk is 1.43 times less risky than LiveChat Software. It trades about 0.02 of its potential returns per unit of risk. LiveChat Software SA is currently generating about 0.0 per unit of risk. If you would invest  560.00  in Astra International Tbk on September 26, 2024 and sell it today you would earn a total of  53.00  from holding Astra International Tbk or generate 9.46% return on investment over 90 days.

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

Astra International Tbk  vs.  LiveChat Software SA

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.

LiveChat Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LiveChat Software SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Astra International and LiveChat Software

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

The idea behind Astra International Tbk and LiveChat Software SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.