Correlation Between Jakarta Int and Astra International

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

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

Diversification Opportunities for Jakarta Int and Astra International

-0.04

Correlation Coefficient

Jakarta Int  Astra International

Good diversification

The 3 months correlation between Jakarta and Astra is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels and Astra International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra International Tbk and Jakarta Int 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 Jakarta Int Hotels are associated (or correlated) with Astra International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra International Tbk has no effect on the direction of Jakarta Int i.e., Jakarta Int and Astra International go up and down completely randomly.

Pair Corralation between Jakarta Int and Astra International

Assuming the 90 days trading horizon Jakarta Int Hotels is expected to generate 5.91 times more return on investment than Astra International. However, Jakarta Int is 5.91 times more volatile than Astra International Tbk. It trades about 0.3 of its potential returns per unit of risk. Astra International Tbk is currently generating about 0.05 per unit of risk. If you would invest  32,400  in Jakarta Int Hotels on September 5, 2024 and sell it today you would earn a total of  118,600  from holding Jakarta Int Hotels or generate 366.05% return on investment over 90 days.

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

Jakarta Int Hotels  vs.  Astra International Tbk

Jakarta Int Hotels

Risk-Adjusted Performance

23 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Int Hotels are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jakarta Int disclosed solid returns over the last few months and may actually be approaching a breakup point.

Astra International Tbk

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astra International Tbk are ranked lower than 3 (%) 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.

Pair Trading with Jakarta Int and Astra International

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

The idea behind Jakarta Int Hotels and Astra International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.