Correlation Between Astra International and Nabors Energy

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

Diversification Opportunities for Astra International and Nabors Energy

-0.6

Correlation Coefficient

Astra International  Nabors Energy

Excellent diversification

The 3 months correlation between Astra and Nabors is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition 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 Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of Astra International i.e., Astra International and Nabors Energy go up and down completely randomly.

Pair Corralation between Astra International and Nabors Energy

Assuming the 90 days horizon Astra International is expected to generate 9.87 times less return on investment than Nabors Energy. In addition to that, Astra International is 4.6 times more volatile than Nabors Energy Transition. It trades about 0.0 of its total potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.08 per unit of volatility. If you would invest  1,033  in Nabors Energy Transition on October 11, 2024 and sell it today you would earn a total of  39.00  from holding Nabors Energy Transition or generate 3.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	25.86%
Values	Daily Returns

Astra International Tbk  vs.  Nabors Energy Transition

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.

Nabors Energy Transition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabors Energy Transition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nabors Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Astra International and Nabors Energy

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

The idea behind Astra International Tbk and Nabors Energy Transition 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.