Correlation Between INTER CARS and PT Astra

Can any of the company-specific risk be diversified away by investing in both INTER CARS and PT Astra 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 INTER CARS and PT Astra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTER CARS SA and PT Astra International, you can compare the effects of market volatilities on INTER CARS and PT Astra 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 INTER CARS with a short position of PT Astra. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and PT Astra.

Diversification Opportunities for INTER CARS and PT Astra

0.15

Correlation Coefficient

INTER CARS  PT Astra

Average diversification

The 3 months correlation between INTER and ASJA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and PT Astra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Astra International and INTER CARS 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 INTER CARS SA are associated (or correlated) with PT Astra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Astra International has no effect on the direction of INTER CARS i.e., INTER CARS and PT Astra go up and down completely randomly.

Pair Corralation between INTER CARS and PT Astra

Assuming the 90 days horizon INTER CARS SA is expected to generate 0.8 times more return on investment than PT Astra. However, INTER CARS SA is 1.25 times less risky than PT Astra. It trades about 0.15 of its potential returns per unit of risk. PT Astra International is currently generating about 0.07 per unit of risk. If you would invest  10,540  in INTER CARS SA on September 5, 2024 and sell it today you would earn a total of  640.00  from holding INTER CARS SA or generate 6.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

INTER CARS SA  vs.  PT Astra International

INTER CARS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTER CARS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INTER CARS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Astra International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, PT Astra is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTER CARS and PT Astra

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

The idea behind INTER CARS SA and PT Astra International 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.