Correlation Between Astra International and Orkla ASA

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

Diversification Opportunities for Astra International and Orkla ASA

-0.25

Correlation Coefficient

Astra International  Orkla ASA

Very good diversification

The 3 months correlation between Astra and Orkla is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk and Orkla ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orkla ASA 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 Orkla ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orkla ASA ADR has no effect on the direction of Astra International i.e., Astra International and Orkla ASA go up and down completely randomly.

Pair Corralation between Astra International and Orkla ASA

Assuming the 90 days horizon Astra International Tbk is expected to under-perform the Orkla ASA. In addition to that, Astra International is 1.42 times more volatile than Orkla ASA ADR. It trades about -0.07 of its total potential returns per unit of risk. Orkla ASA ADR is currently generating about 0.08 per unit of volatility. If you would invest  920.00  in Orkla ASA ADR on November 27, 2024 and sell it today you would earn a total of  54.00  from holding Orkla ASA ADR or generate 5.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Astra International Tbk  vs.  Orkla ASA ADR

Astra International Tbk

Risk-Adjusted Performance

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.

Orkla ASA ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orkla ASA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Orkla ASA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Astra International and Orkla ASA

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

The idea behind Astra International Tbk and Orkla ASA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.