Correlation Between PT Astra and Continental Aktiengesellscha

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

Diversification Opportunities for PT Astra and Continental Aktiengesellscha

-0.02

Correlation Coefficient

PT Astra  Continental Aktiengesellscha

Good diversification

The 3 months correlation between ASJA and Continental is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha 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 Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of PT Astra i.e., PT Astra and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between PT Astra and Continental Aktiengesellscha

Assuming the 90 days trading horizon PT Astra is expected to generate 5.72 times less return on investment than Continental Aktiengesellscha. In addition to that, PT Astra is 1.91 times more volatile than Continental Aktiengesellschaft. It trades about 0.01 of its total potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.11 per unit of volatility. If you would invest  5,516  in Continental Aktiengesellschaft on September 22, 2024 and sell it today you would earn a total of  906.00  from holding Continental Aktiengesellschaft or generate 16.42% return on investment over 90 days.

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

PT Astra International  vs.  Continental Aktiengesellschaft

PT Astra International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Astra International has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Continental Aktiengesellscha

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Continental Aktiengesellscha unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Astra and Continental Aktiengesellscha

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

The idea behind PT Astra International and Continental Aktiengesellschaft 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 CEOs Directory module to screen CEOs from public companies around the world.