Correlation Between Astra Graphia and Sentul City

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

By analyzing existing cross correlation between Astra Graphia Tbk and Sentul City Tbk, you can compare the effects of market volatilities on Astra Graphia and Sentul City 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 Graphia with a short position of Sentul City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Graphia and Sentul City.

Diversification Opportunities for Astra Graphia and Sentul City

0.34

Correlation Coefficient

Astra Graphia  Sentul City

Weak diversification

The 3 months correlation between Astra and Sentul is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Astra Graphia Tbk and Sentul City Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentul City Tbk and Astra Graphia 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 Graphia Tbk are associated (or correlated) with Sentul City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentul City Tbk has no effect on the direction of Astra Graphia i.e., Astra Graphia and Sentul City go up and down completely randomly.

Pair Corralation between Astra Graphia and Sentul City

Assuming the 90 days trading horizon Astra Graphia is expected to generate 7.56 times less return on investment than Sentul City. But when comparing it to its historical volatility, Astra Graphia Tbk is 3.31 times less risky than Sentul City. It trades about 0.1 of its potential returns per unit of risk. Sentul City Tbk is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  4,300  in Sentul City Tbk on September 16, 2024 and sell it today you would earn a total of  3,100  from holding Sentul City Tbk or generate 72.09% return on investment over 90 days.

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

Astra Graphia Tbk  vs.  Sentul City Tbk

Astra Graphia Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astra Graphia Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Astra Graphia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sentul City Tbk

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sentul City Tbk are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sentul City disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astra Graphia and Sentul City

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

The idea behind Astra Graphia Tbk and Sentul City Tbk 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.