Correlation Between Astra International and Compagnie Gnrale

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

Diversification Opportunities for Astra International and Compagnie Gnrale

0.59

Correlation Coefficient

Astra International  Compagnie Gnrale

Very weak diversification

The 3 months correlation between Astra and Compagnie is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Compagnie Gnrale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Gnrale des 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 Compagnie Gnrale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Gnrale des has no effect on the direction of Astra International i.e., Astra International and Compagnie Gnrale go up and down completely randomly.

Pair Corralation between Astra International and Compagnie Gnrale

Assuming the 90 days horizon Astra International Tbk is expected to generate 0.51 times more return on investment than Compagnie Gnrale. However, Astra International Tbk is 1.98 times less risky than Compagnie Gnrale. It trades about 0.01 of its potential returns per unit of risk. Compagnie Gnrale des is currently generating about -0.04 per unit of risk. If you would invest  646.00  in Astra International Tbk on September 13, 2024 and sell it today you would lose (1.00) from holding Astra International Tbk or give up 0.15% of portfolio value over 90 days.

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

Astra International Tbk  vs.  Compagnie Gnrale des

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.

Compagnie Gnrale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Gnrale des has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Astra International and Compagnie Gnrale

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

The idea behind Astra International Tbk and Compagnie Gnrale des 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.