Correlation Between Astra International and Fks Multi

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

Diversification Opportunities for Astra International and Fks Multi

0.15

Correlation Coefficient

Astra International  Fks Multi

Average diversification

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

Pair Corralation between Astra International and Fks Multi

Assuming the 90 days trading horizon Astra International is expected to generate 14.01 times less return on investment than Fks Multi. But when comparing it to its historical volatility, Astra International Tbk is 1.99 times less risky than Fks Multi. It trades about 0.03 of its potential returns per unit of risk. Fks Multi Agro is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  755,000  in Fks Multi Agro on September 5, 2024 and sell it today you would earn a total of  315,000  from holding Fks Multi Agro or generate 41.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Astra International Tbk  vs.  Fks Multi Agro

Astra International Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astra International Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Astra International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Fks Multi Agro

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fks Multi Agro are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Fks Multi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astra International and Fks Multi

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

The idea behind Astra International Tbk and Fks Multi Agro 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.