Correlation Between Astra Graphia and Ramayana Lestari

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

Diversification Opportunities for Astra Graphia and Ramayana Lestari

-0.32

Correlation Coefficient

Astra Graphia  Ramayana Lestari

Very good diversification

The 3 months correlation between Astra and Ramayana is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Astra Graphia Tbk and Ramayana Lestari Sentosa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramayana Lestari Sentosa 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 Ramayana Lestari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramayana Lestari Sentosa has no effect on the direction of Astra Graphia i.e., Astra Graphia and Ramayana Lestari go up and down completely randomly.

Pair Corralation between Astra Graphia and Ramayana Lestari

Assuming the 90 days trading horizon Astra Graphia Tbk is expected to generate 1.33 times more return on investment than Ramayana Lestari. However, Astra Graphia is 1.33 times more volatile than Ramayana Lestari Sentosa. It trades about 0.1 of its potential returns per unit of risk. Ramayana Lestari Sentosa is currently generating about -0.15 per unit of risk. If you would invest  82,655  in Astra Graphia Tbk on September 16, 2024 and sell it today you would earn a total of  6,345  from holding Astra Graphia Tbk or generate 7.68% return on investment over 90 days.

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

Astra Graphia Tbk  vs.  Ramayana Lestari Sentosa

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.

Ramayana Lestari Sentosa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ramayana Lestari Sentosa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Astra Graphia and Ramayana Lestari

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

The idea behind Astra Graphia Tbk and Ramayana Lestari Sentosa 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.