Correlation Between PT Astra and Chalice Brands

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

Diversification Opportunities for PT Astra and Chalice Brands

-0.74

Correlation Coefficient

PT Astra  Chalice Brands

Pay attention - limited upside

The 3 months correlation between PTAIF and Chalice is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Chalice Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Brands 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 Chalice Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Brands has no effect on the direction of PT Astra i.e., PT Astra and Chalice Brands go up and down completely randomly.

Pair Corralation between PT Astra and Chalice Brands

Assuming the 90 days horizon PT Astra International is expected to generate 0.1 times more return on investment than Chalice Brands. However, PT Astra International is 9.57 times less risky than Chalice Brands. It trades about 0.16 of its potential returns per unit of risk. Chalice Brands is currently generating about -0.17 per unit of risk. If you would invest  32.00  in PT Astra International on September 16, 2024 and sell it today you would earn a total of  5.00  from holding PT Astra International or generate 15.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

PT Astra International  vs.  Chalice Brands

PT Astra International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Astra International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, PT Astra reported solid returns over the last few months and may actually be approaching a breakup point.

Chalice Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PT Astra and Chalice Brands

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

The idea behind PT Astra International and Chalice Brands 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.