Correlation Between PT Astra and GNS

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

Diversification Opportunities for PT Astra and GNS

-0.81

Correlation Coefficient

PT Astra  GNS

Pay attention - limited upside

The 3 months correlation between PTAIF and GNS is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and The GNS Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GNS Group 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 GNS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GNS Group has no effect on the direction of PT Astra i.e., PT Astra and GNS go up and down completely randomly.

Pair Corralation between PT Astra and GNS

Assuming the 90 days horizon PT Astra International is expected to generate 0.11 times more return on investment than GNS. However, PT Astra International is 9.42 times less risky than GNS. It trades about 0.16 of its potential returns per unit of risk. The GNS Group is currently generating about -0.13 per unit of risk. If you would invest  32.00  in PT Astra International on September 20, 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	Significant
Accuracy	98.44%
Values	Daily Returns

PT Astra International  vs.  The GNS Group

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.

GNS Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The GNS Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PT Astra and GNS

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

The idea behind PT Astra International and The GNS Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.