Correlation Between PT Astra and Eco Growth

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

Diversification Opportunities for PT Astra and Eco Growth

-0.71

Correlation Coefficient

PT Astra  Eco Growth

Pay attention - limited upside

The 3 months correlation between PTAIF and Eco is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and Eco Growth Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Growth Strategies 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 Eco Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Growth Strategies has no effect on the direction of PT Astra i.e., PT Astra and Eco Growth go up and down completely randomly.

Pair Corralation between PT Astra and Eco Growth

Assuming the 90 days horizon PT Astra is expected to generate 4.56 times less return on investment than Eco Growth. But when comparing it to its historical volatility, PT Astra International is 2.91 times less risky than Eco Growth. It trades about 0.05 of its potential returns per unit of risk. Eco Growth Strategies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Eco Growth Strategies on September 17, 2024 and sell it today you would lose (5.00) from holding Eco Growth Strategies or give up 55.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	63.71%
Values	Daily Returns

PT Astra International  vs.  Eco Growth Strategies

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 unfluctuating forward indicators, PT Astra reported solid returns over the last few months and may actually be approaching a breakup point.

Eco Growth Strategies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Growth Strategies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively inconsistent technical and fundamental indicators, Eco Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Astra and Eco Growth

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

The idea behind PT Astra International and Eco Growth Strategies 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.