Correlation Between Astra International and Morgan Stanley

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

Diversification Opportunities for Astra International and Morgan Stanley

-0.59

Correlation Coefficient

Astra International  Morgan Stanley

Excellent diversification

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

Pair Corralation between Astra International and Morgan Stanley

Assuming the 90 days horizon Astra International Tbk is expected to under-perform the Morgan Stanley. In addition to that, Astra International is 2.09 times more volatile than Morgan Stanley Direct. It trades about -0.09 of its total potential returns per unit of risk. Morgan Stanley Direct is currently generating about 0.02 per unit of volatility. If you would invest  2,059  in Morgan Stanley Direct on October 4, 2024 and sell it today you would earn a total of  7.00  from holding Morgan Stanley Direct or generate 0.34% return on investment over 90 days.

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

Astra International Tbk  vs.  Morgan Stanley Direct

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 unfluctuating 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.

Morgan Stanley Direct

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Astra International and Morgan Stanley

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

The idea behind Astra International Tbk and Morgan Stanley Direct 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.