Correlation Between PT Astra and CD Projekt

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

Diversification Opportunities for PT Astra and CD Projekt

-0.84

Correlation Coefficient

PT Astra  CD Projekt

Pay attention - limited upside

The 3 months correlation between PTAIF and OTGLY is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding PT Astra International and CD Projekt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD Projekt SA 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 CD Projekt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD Projekt SA has no effect on the direction of PT Astra i.e., PT Astra and CD Projekt go up and down completely randomly.

Pair Corralation between PT Astra and CD Projekt

Assuming the 90 days horizon PT Astra is expected to generate 1.14 times less return on investment than CD Projekt. In addition to that, PT Astra is 1.36 times more volatile than CD Projekt SA. It trades about 0.05 of its total potential returns per unit of risk. CD Projekt SA is currently generating about 0.08 per unit of volatility. If you would invest  701.00  in CD Projekt SA on September 4, 2024 and sell it today you would earn a total of  337.00  from holding CD Projekt SA or generate 48.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	62.75%
Values	Daily Returns

PT Astra International  vs.  CD Projekt SA

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.

CD Projekt SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CD Projekt SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PT Astra and CD Projekt

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

The idea behind PT Astra International and CD Projekt SA 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.