Correlation Between PT Astra and SANOK RUBBER

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

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

Diversification Opportunities for PT Astra and SANOK RUBBER

0.0

Correlation Coefficient

PT Astra  SANOK RUBBER

Pay attention - limited upside

The 3 months correlation between ASJA and SANOK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY and PT Astra 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 PT Astra International are associated (or correlated) with SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of PT Astra i.e., PT Astra and SANOK RUBBER go up and down completely randomly.

Pair Corralation between PT Astra and SANOK RUBBER

Assuming the 90 days trading horizon PT Astra is expected to generate 3.32 times less return on investment than SANOK RUBBER. In addition to that, PT Astra is 1.03 times more volatile than SANOK RUBBER ZY. It trades about 0.03 of its total potential returns per unit of risk. SANOK RUBBER ZY is currently generating about 0.11 per unit of volatility. If you would invest  352.00  in SANOK RUBBER ZY on September 4, 2024 and sell it today you would earn a total of  93.00  from holding SANOK RUBBER ZY or generate 26.42% return on investment over 90 days.

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

PT Astra International  vs.  SANOK RUBBER ZY

PT Astra International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking indicators, PT Astra may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SANOK RUBBER ZY

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SANOK RUBBER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and SANOK RUBBER

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

The idea behind PT Astra International and SANOK RUBBER ZY 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.